Alex, Barnes, Caleb and Davis have the following partnership business: Assets Liabilities and equities Cash $55,000 Liabilities $40,000 Current assets 30,000 Alex, capital 60,000 Land 205,000 Barnes, capital 70,000 Building and Equip’t 110,000 Caleb, capital 90,000 Davis, capital 140,000 Total assets $400,000 Total Liab. and Eq’s $400,000 The partners share profits and losses equally. Provide the partners’ ending capital balances in each of the following independent situations. a. Eldridge is added to the partnership after contributing $90,000 to the business. No goodwill or bonus is recorded. b. Eldridge contributes $100,000 in cash to the business and receives a 20% interest in the partnership. Eldridge’s $100,000 investment is considered 20% of the new business’s value, so goodwill may need to be recorded. (Eldridge’s capital balance will be exactly $100,000.) c.. Eidridge is added to the partnership and receives 20% of each partner’s interest in the business after paying $20,000 directly to each of the four partners. No goodwill is recorded.
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.
Alex, Barnes, Caleb and Davis have the following
Assets Liabilities and equities
Cash $55,000 Liabilities $40,000
Current assets 30,000 Alex, capital 60,000
Land 205,000 Barnes, capital 70,000
Building and Equip’t 110,000 Caleb, capital 90,000
Davis, capital 140,000
Total assets $400,000 Total Liab. and Eq’s $400,000
The partners share
Provide the partners’ ending capital balances in each of the following
independent situations.
a. Eldridge is added to the partnership after contributing $90,000 to the business. No
b. Eldridge contributes $100,000 in cash to the business and receives a 20% interest in the partnership. Eldridge’s $100,000 investment is
considered 20% of the new business’s value, so goodwill may need to be
recorded. (Eldridge’s capital balance will be exactly $100,000.)
c.. Eidridge is added to the partnership and receives 20% of each partner’s
interest in the business after paying $20,000 directly to each of
the four partners. No goodwill is recorded.
d.. Caleb retires and has been paid 120% of her capital balance
according to the te
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