A partnership of attorneys in the St. Louis, Missouri, area has the following balance sheet accounts as of January 1, 2021: Assets. $ 354,000 Liabilities Athos, capital Porthos, capital Aramis, capital $ 112,000 94,000 84,000 64,000 According to the articles of partnership, Athos is to receive an allocation of 50 percent of all partnership profits and losses, while Porthos receives 30 percent, and Aramis, 20 percent. The book value of each asset and liability should be considered an accurate representation of fair value. For each of the following independent situations, prepare the journal entry or entries to be recorded by the partnership. a. Porthos, with permission of the other partners, decides to sell half of his partnership interest to D'Artagnan for $52,000 in cash. No asset revaluation or goodwill is to be recorded by the partnership. b. All three of the present partners agree to sell 10 percent of each partnership interest to D'Artagnan for a total cash payment of $30,000. Each partner receives a negotiated portion of this amount. Goodwill is recorded as a result of the transaction. c. D'Artagnan is allowed to become a partner with a 20 percent ownership interest by contributing $64,000 in cash directly into the business. The bonus method is used to record this admission. d. Use the same facts as in requirement (c) except that the entrance into the partnership is recorded by the goodwill method. e. D'Artagnan is allowed to become a partner with a 15 percent ownership interest by contributing $24,000 in cash directly to the business. The goodwill method is used to record this transaction. f. Aramis decides to retire and leave the partnership. An independent appraisal of the business and its assets indicates a current fair value of $306,000. Goodwill is to be recorded. Aramis will then be given the exact amount of cash that will close out his capital account.
A partnership of attorneys in the St. Louis, Missouri, area has the following balance sheet accounts as of January 1, 2021: Assets. $ 354,000 Liabilities Athos, capital Porthos, capital Aramis, capital $ 112,000 94,000 84,000 64,000 According to the articles of partnership, Athos is to receive an allocation of 50 percent of all partnership profits and losses, while Porthos receives 30 percent, and Aramis, 20 percent. The book value of each asset and liability should be considered an accurate representation of fair value. For each of the following independent situations, prepare the journal entry or entries to be recorded by the partnership. a. Porthos, with permission of the other partners, decides to sell half of his partnership interest to D'Artagnan for $52,000 in cash. No asset revaluation or goodwill is to be recorded by the partnership. b. All three of the present partners agree to sell 10 percent of each partnership interest to D'Artagnan for a total cash payment of $30,000. Each partner receives a negotiated portion of this amount. Goodwill is recorded as a result of the transaction. c. D'Artagnan is allowed to become a partner with a 20 percent ownership interest by contributing $64,000 in cash directly into the business. The bonus method is used to record this admission. d. Use the same facts as in requirement (c) except that the entrance into the partnership is recorded by the goodwill method. e. D'Artagnan is allowed to become a partner with a 15 percent ownership interest by contributing $24,000 in cash directly to the business. The goodwill method is used to record this transaction. f. Aramis decides to retire and leave the partnership. An independent appraisal of the business and its assets indicates a current fair value of $306,000. Goodwill is to be recorded. Aramis will then be given the exact amount of cash that will close out his capital account.
Chapter14: Choice Of Business Entity—operations And Distributions
Section: Chapter Questions
Problem 20P
Related questions
Question
Need help with parts C through F
Transcribed Image Text:A partnership of attorneys in the St. Louis, Missouri, area has the following balance sheet accounts as of January 1, 2021:
Assets
$ 354,000
Liabilities
Athos, capital
Porthos, capital
Aramis, capital
$ 112,000
94,000
84,000
64,000
According to the articles of partnership, Athos is to receive an allocation of 50 percent of all partnership profits and losses,
while Porthos receives 30 percent, and Aramis, 20 percent. The book value of each asset and liability should be considered
an accurate representation of fair value.
For each of the following independent situations, prepare the journal entry or entries to be recorded by the partnership.
a. Porthos, with permission of the other partners, decides to sell half of his partnership interest to D'Artagnan for $52,000 in
cash. No asset revaluation or goodwill is to be recorded by the partnership.
b. All three of the present partners agree to sell 10 percent of each partnership interest to D'Artagnan for a total cash
payment of $30,000. Each partner receives a negotiated portion of this amount. Goodwill is recorded as a result of the
transaction.
c. D'Artagnan is allowed to become a partner with a 20 percent ownership interest by contributing $64,000 in cash directly
into the business. The bonus method is used to record this admission.
d. Use the same facts as in requirement (c) except that the entrance into the partnership is recorded by the goodwill method.
e. D'Artagnan is allowed to become a partner with a 15 percent ownership interest by contributing $24,000 in cash directly to
the business. The goodwill method is used to record this transaction.
f. Aramis decides to retire and leave the partnership. An independent appraisal of the business and its assets indicates a
current fair value of $306,000. Goodwill is to be recorded. Aramis will then be given the exact amount of cash that will
close out his capital account.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 6 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Financial Accounting
Accounting
ISBN:
9781305088436
Author:
Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:
Cengage Learning