Dexter Thomas and Herman Walker, attorneys, operate a law practice. They would like to expand the expertise of their firm. In anticipation of this, they have agreed to admit Jewell Lorenzo to the partnership on January 1, 20X1. The capital account balances c January 1, 20X1, after revaluation of assets, are Thomas, $179,000, and Walker, $139,000. Net income or net loss is shared equally. Required: Prepare the entries in general journal form to record the admission of Lorenzo to the partnership on January 1, 20X1, under each of t following independent conditions: 1. Thomas sells one-half of his interest in the partnership to Lorenzo for $127,000 cash. 2. Thomas sells one-half of his interest in the partnership to Lorenzo for $83,000 cash. 3. Lorenzo invests $119,000 in the business for a 25 percent interest in the partnership. 4. Lorenzo invests $123,000 in the business for a 30 percent interest in the partnership. Analyze: Assume that Lorenzo invests $119,000 in the business for a 25 percent interest in the partnership. What percentage of total equity does each partner own?
Dexter Thomas and Herman Walker, attorneys, operate a law practice. They would like to expand the expertise of their firm. In anticipation of this, they have agreed to admit Jewell Lorenzo to the partnership on January 1, 20X1. The capital account balances c January 1, 20X1, after revaluation of assets, are Thomas, $179,000, and Walker, $139,000. Net income or net loss is shared equally. Required: Prepare the entries in general journal form to record the admission of Lorenzo to the partnership on January 1, 20X1, under each of t following independent conditions: 1. Thomas sells one-half of his interest in the partnership to Lorenzo for $127,000 cash. 2. Thomas sells one-half of his interest in the partnership to Lorenzo for $83,000 cash. 3. Lorenzo invests $119,000 in the business for a 25 percent interest in the partnership. 4. Lorenzo invests $123,000 in the business for a 30 percent interest in the partnership. Analyze: Assume that Lorenzo invests $119,000 in the business for a 25 percent interest in the partnership. What percentage of total equity does each partner own?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
Transcribed Image Text:Dexter Thomas and Herman Walker, attorneys, operate a law practice. They would like to expand the expertise of their firm. In
anticipation of this, they have agreed to admit Jewell Lorenzo to the partnership on January 1, 20X1. The capital account balances on
January 1, 20X1, after revaluation of assets, are Thomas, $179,000, and Walker, $139,000. Net income or net loss is shared equally.
Required:
Prepare the entries in general journal form to record the admission of Lorenzo to the partnership on January 1, 20X1, under each of the
following independent conditions:
1. Thomas sells one-half of his interest in the partnership to Lorenzo for $127,000 cash.
2. Thomas sells one-half of his interest in the partnership to Lorenzo for $83,000 cash.
3. Lorenzo invests $119,000 in the business for a 25 percent interest in the partnership.
4. Lorenzo invests $123,000 in the business for a 30 percent interest in the partnership.
Analyze:
Assume that Lorenzo invests $119,000 in the business for a 25 percent interest in the partnership. What percentage of total equity
does each partner own?
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