Peter and Steve admit Meredith to their partnership, with Meredith paying $70,000 more than the book value of her equity in the new business. Peter and Steve have no formal profit-and-loss-sharing...

Peter and Steve admit Meredith to their partnership, with Meredith paying $70,000 more than the book value of her equity in the new business. Peter and Steve have no formal profit-and-loss-sharing agreement. What effect does admitting Meredith to the partnership have on the capital balances of Peter and Steve?

a. Credit the Peter and Steve capital accounts for $35,000 each.

b. Cannot be determined because there’s no profit-and-loss-sharing ratio.

c. Debit the Peter and Steve capital accounts for $35,000 each.

d. Credit the Peter and Steve capital accounts for $70,000 each.