Admission of new partner-Bonus MethodAssume that Partners A and B each report a Capital Account of $500,000. Partner C wants to join the partnership as an equal one-third partner. Because the partnership has been very profitable, Partners A and Brequire Partner C to contribute $800,000 in cash to the partnership in return for a one-third interest. Assume that Partners A and B share profits 60% and 40%, respectively, prior to the admission of Partner C.After admission of Partner C, Partners A and B retain their relative proportion of profit allocation after granting Partner C a 25% profit-allocation interest. Use the Bonus Method to record the journal entry on thebooks of the partnership to reflect the admission of Partner C.DescriptionDebitCreditCapital Account, Partner ACapital Account, Partner B

Partnership -A partnership is a type of business structure that allows two or more people to…

sume that Partners A and B each report a Capital Account of $500,000. Partner C wants to join the partnership as an equal one-third partner. Because the partnership has been ver quire Partner C to contribute $800,000 in cash to the partnership in return for a one-third interest. Assume that Partners A and B share profits 60% and 40%, respectively, prior to t er admission of Partner C, Partners A and B retain their relative proportion of profit allocation after granting Partner C a 25% profit-allocation interest. Use the Bonus Method to re oks of the partnership to reflect the admission of Partner C. Description Debit Credit Capital Account, Partner A Capital Account, Partner B

sume that Partners A and B each report a Capital Account of $500,000. Partner C wants to join the partnership as an equal one-third partner. Because the partnership has been ver quire Partner C to contribute $800,000 in cash to the partnership in return for a one-third interest. Assume that Partners A and B share profits 60% and 40%, respectively, prior to t er admission of Partner C, Partners A and B retain their relative proportion of profit allocation after granting Partner C a 25% profit-allocation interest. Use the Bonus Method to re oks of the partnership to reflect the admission of Partner C. Description Debit Credit Capital Account, Partner A Capital Account, Partner B

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A and B are partners with initial investment of $60,000 and $40,000 respectively. They share income and loss by 60% for A and 40% for B. They accepted C as a new partner in the partnership. Required: Record the admission of C under each of the following separate assumptions: (1) C purchased one-half of A's interest for $35,000 cash (2) C invests cash of $40,000 in the partnership and receives 25% ownership interest in the new partnership. YOUR ANSWER SHOULD BE IN THE FOLLOWING FORM; DO NOT USE BETWEEN NUMBERS Dr Cash 100000 Cr. Land 100000
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After the tangible assets have been adjusted to current market prices, the capital accounts of Grayson Jackson and Harry Barge have balances of $64,900 and $86,500, respectively. Lewan Gorman is to be admitted to the partnership, contributing $43,300 cash to the partnership, for which he is to receive an ownership equity of $50,500. All partners share equally in income. a. Journalize the entry to record the admission of Gorman, who is to receive a bonus of $7,200. If an amount box does not require an entry, leave it blank. Cash Grayson Jackson, Capital Harry Barge, Capital Lewan Gorman, Capital b. What are the capital balances of each partner after the admission of the new partner? Partner Balance Grayson Jackson $ Harry Barge $ Lewan Gorman $
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A and B are partners who share profits and losses in a ratio of 1:2 with capital balance of 900k and 1.8M respectively. both of them agreed to admit C as partner with 900k investment for a 25% share interest in the partnership B's capital balance should be?