Computing initial partner investments Careem and Labceb establish an equal partnership in both cquity and profits to operate a used- furniture business under the name of C&L Furniture. Careem contributes furniture inventory that cost S120,000 and has fair value of S160,000. Labeeb contributes $60,000 cash and delivery equipment that cost $80,000 and has a fair value of $60,000. Required: Assume that the initial noncash contributions of the partners are recorded at fair market value. A) Compute the ending balance of cach capital account under the bonus and goodwill approaches. B) Prepare the journal entries of the initial investments under both approaches.
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.
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