a. Record the adjustment to the books before the new partner is admitted. b. Assume sparrow invests in the partnership $250,000 and partners agree thereafter to share profits and losses equally. Record the entry of Sparrow using the bonus method whereby Sparrow receives 20% interest in the firm. c. Assume, instead Sparrow puts into the partnership $350,000 of cash and is awarded a 50% interest. Record the entry of sparrow using the goodwill method.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
1. Robin,Cardinal, Jay are partners sharing
Robin $175,000
Cardinal $300,000
Jay $275,000
total $750,000
The old and partners agree that the assets are undervalued by $100,000.
a. Record the adjustment to the books before the new partner is admitted.
b. Assume sparrow invests in the
c. Assume, instead Sparrow puts into the partnership $350,000 of cash and is awarded a 50% interest. Record the entry of sparrow using the
d. In the first year after Sparrow's entrance under the conditions outlined in part "c" above, an agreement was made amending the sharing of profits and losses, whereby Jay gets a salary of $40,000, and each partner receives 10% interest on their beginning capital balances with the remainder shared equally. Unfortunately, the amendment was never written down and the partners are in dispute over this arrangement. The partnership lost $400,000.
Prepare a schedule showing how the loss will be shared.
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