At April 30, partners' capital balances in Crane Company are G. Donley $54,080, C. Lamar $49,920, and J. Pinkston $18,720. The income sharing ratios are 5:4:1, respectively. On May 1, the PDLT Company is formed by admitting J. Terrell to the firm as a partner. (a) Journalize the admission of Terrell under each of the following independent assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275.) (1) (2) (3) (4) No. Account Titles and Explanation 1. 2. 3. Terrell purchases 50% of Pinkston's ownership interest by paying Pinkston $16,640 in cash. Terrell purchases 33¹/3% of Lamar's ownership interest by paying Lamar $15,600 in cash. Terrell invests $64,480 for a 30% ownership interest, and bonuses are given to the old partners. Terrell invests $43,680 for a 30% ownership interest, which includes a bonus to the new partner. 4. V Debit Credit

At April 30, partners' capital balances in Crane Company are G. Donley $54,080, C. Lamar $49,920, and J. Pinkston $18,720. The income sharing ratios are 5:4:1, respectively. On May 1, the PDLT Company is formed by admitting J. Terrell to the firm as a partner. (a) Journalize the admission of Terrell under each of the following independent assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275.) (1) (2) (3) (4) No. Account Titles and Explanation 1. 2. 3. Terrell purchases 50% of Pinkston's ownership interest by paying Pinkston $16,640 in cash. Terrell purchases 33¹/3% of Lamar's ownership interest by paying Lamar $15,600 in cash. Terrell invests $64,480 for a 30% ownership interest, and bonuses are given to the old partners. Terrell invests $43,680 for a 30% ownership interest, which includes a bonus to the new partner. 4. V Debit Credit

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

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.

Question

100%

(b)
Lamar's capital balance is $33,280 after admitting Terrell to the partnership by investment. If Lamar's ownership interest is 20%
of total partnership capital, what were (1) Terrell's cash investment and (2) the bonus to the new partner?
(1)
(2)
Terrell's cash investment
Bonus to new partner
$
$

At April 30, partners' capital balances in Crane Company are G. Donley $54,080, C. Lamar $49,920, and J. Pinkston $18,720. The
income sharing ratios are 5:4:1, respectively. On May 1, the PDLT Company is formed by admitting J. Terrell to the firm as a partner.
(a)
Journalize the admission of Terrell under each of the following independent assumptions. (Credit account titles are automatically
indented when amount is entered. Do not indent manually. Round answers to O decimal places, e.g. 5,275.)
(1)
(2)
(3)
(4)
No. Account Titles and Explanation
1.
2.
3.
Terrell purchases 50% of Pinkston's ownership interest by paying Pinkston $16,640 in cash.
Terrell purchases 33¹/3% of Lamar's ownership interest by paying Lamar $15,600 in cash.
Terrell invests $64,480 for a 30% ownership interest, and bonuses are given to the old partners.
Terrell invests $43,680 for a 30% ownership Interest, which includes a bonus to the new partner.
4.
Debit
Credit

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