Assume that Nando is allowed a 20% interest in the new firm. 1. What entry would be made in recording the admission of Nando if the goodwill method is used? 2. What entry would be made if the bonus method is used?

Assume that Nando is allowed a 20% interest in the new firm. 1. What entry would be made in recording the admission of Nando if the goodwill method is used? 2. What entry would be made if the bonus method is used?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter15: Partnership Accounting

Section: Chapter Questions

Problem 2PB: The partnership of Arun, Margot, and Tammy has been doing well. Arun wants to retire and move to...

See similar textbooks

Similar questions

What are the answers on questions 1,2,3 and 4?
What is the answer to this question?
Rachel, Monica and Phoebe are partners with capital balances of P896,000, P3,120,000 and 3,160,( respectively, sharing profits and losses in the ration 3:2:1. Janice is admitted as a new partner bringing with her expertise and is to invest cash for a 25% interest in the partnership, which includes a credit of P840,000 bonus upon his admission. 1.How much cash should Janice contribute? A.1,560,000 B. 1,800,000 C. 2,540,000 D. 672,000
Not what you’re looking for? Continue submitting your question. Submit your question Question i. Kijiko and Sahani is in partnership sharing profits and losses 3:2. ii. Under the terms of the partnership agreement, the partners are entitled to interest on capital at 5% per annum and Sahani is entitled to a salary of Kshs. 4,500. Interest is charged on drawings at 5% per annum depending on when the drawings were withdrawn and the amounts of interest on drawings are given below. No interest is charged or allowed on current accounts. The interests on drawings are: Kijiko kshs. 600 and Sahani Kshs. 750. iii. The partners’ capitals at 1 July 2018 were: Kijiko Kshs. 30,000 and Sahani Kshs. 10,000. iv. The net trading profit of the firm, before dealing with partners’ interest or Sahani salary for the year ended 30 June 2019 was Kshs. 25,800. At 1 July 2018, there was a credit balance of Kshs. 1,280 on Sahani current account, while Kijiko current account balance was a debit of Kshs.…
What is the answer to this question?
= Homnes is admitted to the partnership of Rose & Novak. Prior to Hornes' admission, the partnership books show Rose's capital balance at $170,000 and Novak's at $85,000. Assume Rose and Novak share profits and losses equally. Read the requirements. Requirement 1. Compute each partner's equity on the books of the new partnership under the following plans: a. Hornes pays $100,000 for Novak's equity. Hornes pays Novak directly. Begin by computing the partner's equity base for plan a. Homes pays $100,000 for Novak's equity. Hornes pays Novak directly. (Enter a share for each partner. Complete all input fields. For accounts with a $0 balance, make sure to enter "0" in the a field. Enter negative amounts with a parentheses or minus sign.) Plan A Plan A: Partnership capital before admission of Hornes Plan A: Effect on capital balance as a result of admission of Hornes Plan A: Partnership capital after admission of Hornes b. Hornes contributes $85,000 to acquire a 1/4 interest in the…
What is the answer to this question?
Marga, David and Anna are partners with capital balances of P784,000, P2,730,000 and P1,190,000 respectively, sharing profits and losses in the ratio of 3:2:1. Cassandra is admitted as a new partner bringing with him expertise and is to invest cash for a 25% interest in the partnership which includes a credit of P735,000 for bonus upon her admission. How much cash should Cassandra contribute?
Dennis is being admitted into the partnership of Danilo, Romeo and Sanros. As of the date of admission, the capital balances and share in net income of the three partners are as follows: Capital Balance P/L Ratio Danilo P30,000 30% Romeo 60,000 50 Sanros 10,000 20 Make the entries incidental to the admission of Dennis who invests P30,000 for: 1/5 interest in the partnership with capital credit equal to his investment. 1/3 interest in the partnership with total capitalization of P150,000. 1/5 interest in the partnership with total capitalization of P130,000. 30% interest in the partnership with total capitalization of P130,000. 25% interest in the partnership with total agreed capital of P150,000. 30% interest in the partnership. The partnership has asset revaluation of P10,000 15% interest in the total partners’ equity of P150,000.
Choose the correct. Pat, Jean Lou, and Diane are partners with capital balances of $50,000, $30,000, and $20,000, respectively. These three partners share profits and losses equally. For an investment of $50,000 cash (paid to the business), MaryAnn will be admitted as a partner with a one-fourth interest in capital and profits. Based on this information, which of the following best justifies the amount of MaryAnn’s investment?a. MaryAnn will receive a bonus from the other partners upon her admission to the partnership.b. Assets of the partnership were overvalued immediately prior to MaryAnn’s investment.c. The book value of the partnership’s net assets was less than the fair value immediately prior to MaryAnn’s investment.d. MaryAnn is apparently bringing goodwill into the partnership, and her capital account will be credited for the appropriate amount.
Allocation of bonus to Arun and Margot: Arun Margot C. $50,000 Total capital of Arun and Margot Investment by new partner, Tammy Total capital of new partnership Tammy's capital credit Total bonus to Arun and Margot Prepare the journal entries to show the resulting each of the three partners' capital accounts. If an amount box does not require an entry, leave it blank. A. B. C. %24 %24 %24 %24
11. Chen and Fran are partners sharing profits equally. Their respective capital balances are P2,000,000. And P1,000,000. They agree to admit Paula as a new partner. Prepare a table to revise partners’ equity and record her admission based on the following independent cases: a) Total agreed equity of P5,000,000. If there is no asset revaluation and no bonus, how much will she invest and for what percent of interest? b) She will be given a 50% interest and a bonus of P100,000 from the existing partners. How much is total agreed equity and how much will Paula invest? c) She will be given a 1/3 interest in an agreed total capital of P6,000,000. Assets should be revalued (upward adjustment) for P1,000,000. How much will Paula invest?