The Prince-Robbins partnership has the following capital account balances on January 1, 2021: Prince, Capital $ 65,000 Robbins, Capital 55,000 Prince is allocated 70 percent of all profits and losses with the remaining 30 percent assigned to Robbins after interest of 9 percent is given to each partner based on beginning capital balances. On January 2, 2021, Jeffrey invests $34,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the goodwill method. After this transaction, 9 percent interest is still to go to each partner. Profits and losses will then be split as follows: Prince (50 percent), Robbins (30 percent), and Jeffrey (20 percent). In 2021, the partnership reports a net income of $14,000. Prepare the journal entry to record Jeffrey’s entrance into the partnership on January 2, 2021. Prepare a schedule showing how the 2021 net income allocation to the partners should be determined.
The Prince-Robbins
| Prince, Capital | $ | 65,000 |
| Robbins, Capital | 55,000 | |
Prince is allocated 70 percent of all
On January 2, 2021, Jeffrey invests $34,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the
-
Prepare the
journal entry to record Jeffrey’s entrance into the partnership on January 2, 2021. -
Prepare a schedule showing how the 2021 net income allocation to the partners should be determined.
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