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C. interest in the business after paying the four partners. No goodwill is recorded. Elmore is added to the partnership and receives 20% of each partner's $39,000 directly to each of

C. interest in the business after paying the four partners. No goodwill is recorded. Elmore is added to the partnership and receives 20% of each partner's $39,000 directly to each of

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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part c

Ann, Bill, Carl and Dawn have the following partnership business: Assets Liabilities and equities Cash $55,000 Liabilities $40,000 60,000 70,000 Current assets 30,000 Ann, capital Bill, capital Carl, capital Land 205,000 Building and Equip't 110,000 90,000 Dawn, capital 140,000 $400,000 Total assets $400,000 Total Liab. and Eq's The partners share profits and losses equally. Provide the partners' ending capital balances in each of the following independent situations. a. Elmore is added to the partnership after contributing $80,000 to the business. No goodwill or bonus is recorded. b. receives a 20% interest in the partnership. Elmore's $100,000 investment is considered 20% of the new business's value, so goodwill may need to be Elmore contributes $100,000 in cash to the business and recorded. (Elmore's capital balance will be exactly $100,000.) C. Elmore is added to the partnership and receives 20% of each partner's $39,000 directly to each of interest in the business after paying the four partners. No goodwill is recorded.
Transcribed Image Text:Ann, Bill, Carl and Dawn have the following partnership business: Assets Liabilities and equities Cash $55,000 Liabilities $40,000 60,000 70,000 Current assets 30,000 Ann, capital Bill, capital Carl, capital Land 205,000 Building and Equip't 110,000 90,000 Dawn, capital 140,000 $400,000 Total assets $400,000 Total Liab. and Eq's The partners share profits and losses equally. Provide the partners' ending capital balances in each of the following independent situations. a. Elmore is added to the partnership after contributing $80,000 to the business. No goodwill or bonus is recorded. b. receives a 20% interest in the partnership. Elmore's $100,000 investment is considered 20% of the new business's value, so goodwill may need to be Elmore contributes $100,000 in cash to the business and recorded. (Elmore's capital balance will be exactly $100,000.) C. Elmore is added to the partnership and receives 20% of each partner's $39,000 directly to each of interest in the business after paying the four partners. No goodwill is recorded.
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