E 16-8 Recording new partner investment—Revaluation case Bow and Mon are partners in a retail business and divide profits 60 percent to Bow and 40 percent to Mon. Their capital balances at December 31, 2016, are as follows: Bow capital $120,000 Mon capital 120,000 Total capital $240,000 Partnership assets and liabilities have book values equal to fair values. The partners agree to admit Joh into the partnership. Joh purchases a one-third interest in partnership capital and profits directly from Bow and Mon (one-third of each of their capital accounts) for $100,000. Required Prepare journal entries for the admission of Joh into the partnership, assuming that partnership assets are revalued.
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 16-8 Recording new partner investment—Revaluation case
Bow and Mon are partners in a retail business and divide profits 60 percent to Bow and 40 percent to Mon. Their capital balances at December 31, 2016, are as follows:
|
Bow capital |
$120,000 |
|
Mon capital |
120,000 |
|
Total capital |
$240,000 |
Partnership assets and liabilities have book values equal to fair values. The partners agree to admit Joh into the partnership. Joh purchases a one-third interest in partnership capital and profits directly from Bow and Mon (one-third of each of their capital accounts) for $100,000.
Required
Prepare
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