CP 12–3 Assume the following information just prior to the admission of new partner I: Assets Liabilities Cash $ 5,000 Accounts payable $8,000 Accounts receivable $43,000 Partners’ Capital G, Capital $30,000 H, Capital 10,000 40,000 $48,000 $48,000 Required: Prepare journal entries to record the following unrelated scenarios: 5. New partner I purchases partners G’s partnership interest for $40,000. 6. New partner I receives a cash bonus of $2,000 and a one‐tenth ownership share, allocated equally from the partnership interests of G and H. 7. New partner I contributes land with a fair value of $100,000. Relative ownership interests after this transaction are: Partner Ownership interest G 20% H 5% I 75% 100%
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.
Assume the following information just prior to the admission of new
partner I:
Assets Liabilities
Cash $ 5,000 Accounts payable $8,000
Partners’ Capital
G, Capital $30,000
H, Capital 10,000 40,000
$48,000 $48,000
Required: Prepare
scenarios:
5. New partner I purchases partners G’s
$40,000.
6. New partner I receives a cash bonus of $2,000 and a one‐tenth
ownership share, allocated equally from the partnership interests
of G and H.
7. New partner I contributes land with a fair value of $100,000.
Relative ownership interests after this transaction are:
Partner Ownership
interest
G 20%
H 5%
I 75%
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