The Distance Plus partnership has the following capital balances at the beginning of the current year:Each of the following questions should be viewed independently.If Sergio invests $100,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the bonus method is used.If Sergio invests $60,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the bonus method is used.If Sergio invests $72,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the goodwill method is used. Tiger (50% of profits and losses)Phil (30%)Ernie (20%)..$85,00060,00055,000....

Under the bonus method, the total capital investment is calculated by adding the investment of a new…

Answered: Tiger (50% of profits and losses) Phil…

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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The Distance Plus partnership has the following capital balances at the beginning of the current year:

Each of the following questions should be viewed independently.

If Sergio invests $100,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the bonus method is used.
If Sergio invests $60,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the bonus method is used.
If Sergio invests $72,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the goodwill method is used.

Tiger (50% of profits and losses)
Phil (30%)
Ernie (20%)..
$85,000
60,000
55,000
....

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement 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, and drawings of a partner.

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