3. Reed, Sharp, and Tucker were partners with capital account balances of $80,000, $100,000, and $70,000, respectively. They agreed to admit Upton to the partnership. Upton purchased 30% of each partner's interest, with payments to Reed, Sharp, and Tucker of $32,000, $40,000, and $28,000, respectively. Before the admission of Upton, profits and losses were equally shared. The partners agreed to use the bonus method to account for the admission of Upton to the partnership. a. Prepare the journal entry to record the admission of Upton to the partnership, assuming no goodwill was recognized. b. Answer part b assuming instead that $120,000 was paid to the partnership and goodwill was recognized.

3. Reed, Sharp, and Tucker were partners with capital account balances of $80,000, $100,000, and $70,000, respectively. They agreed to admit Upton to the partnership. Upton purchased 30% of each partner's interest, with payments to Reed, Sharp, and Tucker of $32,000, $40,000, and $28,000, respectively. Before the admission of Upton, profits and losses were equally shared. The partners agreed to use the bonus method to account for the admission of Upton to the partnership. a. Prepare the journal entry to record the admission of Upton to the partnership, assuming no goodwill was recognized. b. Answer part b assuming instead that $120,000 was paid to the partnership and goodwill was recognized.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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