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, $340,000, and Walker, $300,000. 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: Thomas sells one-half of his interest in the partnership to Lorenzo for $276,000 cash. Thomas sells one-half of his interest in the partnership to Lorenzo for $188,000 cash. Lorenzo invests $260,000 in the business for a 25 percent interest in the partnership.
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, $340,000, and Walker, $300,000. 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: Thomas sells one-half of his interest in the partnership to Lorenzo for $276,000 cash. Thomas sells one-half of his interest in the partnership to Lorenzo for $188,000 cash. Lorenzo invests $260,000 in the business for a 25 percent interest in the partnership.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
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:
- Thomas sells one-half of his interest in the partnership to Lorenzo for $276,000 cash.
- Thomas sells one-half of his interest in the partnership to Lorenzo for $188,000 cash.
- Lorenzo invests $260,000 in the business for a 25 percent interest in the partnership.
- Lorenzo invests $268,000 in the business for a 30 percent interest in the partnership.
Analyze:
Assume that Lorenzo invests $260,000 in the business for a 25 percent interest in the partnership. What percentage of total equity does each partner own?
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