Keri & Nick Consulting’s partners’ equity accounts reflected the following balances on August 31, 2020: Keri Lee, Capital $ 68,000 Nick Kalpakian, Capital 205,000 Lee and Kalpakian share profit/losses in a 2:3 ratio, respectively. On September 1, 2020, Liam Court is admitted to the partnership with a cash investment of $117,000. Required: Prepare the journal entry to record the admission of Liam under each of the following unrelated assumptions, where he is given:
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.
Keri & Nick Consulting’s partners’ equity accounts reflected the following balances on August 31, 2020:
| Keri Lee, Capital | $ | 68,000 | |
| Nick Kalpakian, Capital | 205,000 | ||
Lee and Kalpakian share
Required:
Prepare the
a. A 30% interest in equity
b. A 20% interest in equity
c. A 50% interest in equity
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