In the GMP partnership (to which Elan seeks admittance), the capital balances of Mary, Gene, and Pat, who share income in the ratio of 6:3:1, are Mary $ 268,800 Gene 134,400 Pat 44,800 Required: If no goodwill or bonus is recorded, how much must Elan invest for a one-third interest? Prepare journal entry for the admission of Elan if she invests $81,100 for a 20 percent interest and goodwill is recorded. Prepare journal entry for the admission of Elan if she invests $202,000 for a 20 percent interest. Total capital will be $650,000; the partners use the bonus method.
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.
In the GMP
| Mary | $ 268,800 |
|---|---|
| Gene | 134,400 |
| Pat | 44,800 |
Required:
- If no
goodwill or bonus is recorded, how much must Elan invest for a one-third interest? - Prepare
journal entry for the admission of Elan if she invests $81,100 for a 20 percent interest and goodwill is recorded. - Prepare journal entry for the admission of Elan if she invests $202,000 for a 20 percent interest. Total capital will be $650,000; the partners use the bonus method.
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