E 16-6 Partnership income allocation—Assignment of interest to a third party Capital balances and profit- and loss-sharing ratios of the partners in the BIG Entertainment Galley are as follows: Ben capital (50%) $900,000 Irv capital (30%) 680,000 Geo capital (20%) 500,000 Total $2,080,000 Ben needs money and agrees to assign half of his interest in the partnership to Pet for $280,000 cash. Pet pays $280,000 directly to Ben. Required Prepare a journal entry to record the assignment of half of Ben’s interest in the partnership to Pet. What is the total capital of the BIG partnership immediately after the assignment of the interest to Pet?
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.
E 16-6 Partnership income allocation—Assignment of interest to a third party
Capital balances and profit- and loss-sharing ratios of the partners in the BIG Entertainment Galley are as follows:
|
Ben capital (50%) |
$900,000 |
|
Irv capital (30%) |
680,000 |
|
Geo capital (20%) |
500,000 |
|
Total |
$2,080,000 |
Ben needs money and agrees to assign half of his interest in the partnership to Pet for $280,000 cash. Pet pays $280,000 directly to Ben.
Required
-
Prepare a
journal entry to record the assignment of half of Ben’s interest in the partnership to Pet. -
What is the total capital of the BIG partnership immediately after the assignment of the interest to Pet?
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