Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission. The entries when W directly purchases half of M’s investment for $90,000.

Question

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Answer 1

Question

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.

Chapter 15, Problem 15.11P

a.

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entries when W directly purchases half of M’s investment for $90,000.

a.

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
M’s capital account	80,000
W’s capital account		80,000

Explanation of Solution

M’s investment in partnership is $160,000 half of which is $80,000 credited to W, and W pays $90,000 directly to M. No entry is required for payment as W paid M directly.

b

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests amount needed for one-third interest in partnership’s capital and no goodwill or bonus is recorded.

b

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$180,000
W’s capital account		180,000

Explanation of Solution

Determination of required investment by W


2/3 of total capital	$360,000
Total resulting capital ($360,000 / .6666	$540,000

Amount to be invested by W ($540,000 x 1/3)	$180,000

Then investment by W is debited to cash account and credited to W’s capital account.

c

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests $110,000 for 25 percent interest in partnership and goodwill to be recorded.

c

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$110,000
Goodwill	10,000
W’s capital account		120,000

Explanation of Solution

Estimation of goodwill

As W is investing for 25 percent of interest which is 1/4^t^h of total capital then

¾ estimated total resulting capital = $360,000

Estimated total resulting capital ($360,000 ÷ ¾) = $480,000

Determination of goodwill

Estimated total resulting capital = $480,000

Less: total assets excluding goodwill

($360,000 + 110,000 W’s investment) = ($470,000)

Goodwill =$10,000

d

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests $100,000 for 25 percent interest and inventory account decreased before W’s admission.

d

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
To record write down of inventory
D’s capital account	36,000
M’s capital account	24,000
Inventory		60,000

To record admission of W
Cash	$100,000
W’s capital account		100,000

Explanation of Solution

Determination of write down of inventory

¼ estimated total resulting $100,000

Estimated total resulting capital ($100,000 ÷ ¼) $400,000

Inventory write down =

Estimated total resulting capital = $400,000

Total net assets before inventory write-down $360,000 + $100,000 W’s investment = ($460,000)

Inventory write-down=($60,000)

Value of inventory debit to D’s capital ($60,000 x .60) = $36,000

M’s capital ($60,000 x .40) = $24,000

e

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

Requirement 5

the entry when W purchases 25 percent interest by paying D $80,000 and M $60,000. The value of land is increased before admission.

e

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Entry for revaluation of land
Land account	$200,000
D’s capital account		120,000
M’s capital account		80,000

To record admission of W
D’s capital account	$80,000
M’s capital account	60,000
W’s capital account		140,000

Explanation of Solution

Estimation of total capital

¼ of estimated total capital ($80,000 + $60,000) = $140,000

Estimated total resulting capital ($140,000 ÷ ¼) = $560,000

Estimation of increase in land value

Total estimated resulting capital = $560,000

Less: total net asset before revaluation of land

($200,000 + 160,000) (360,000)

Increase in land $200,000

D’s share in the increase in land value $200,000 x .60 = $120,000

M’s share in the increase in land value $200,000 x .40 = 80,000

f

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

the entry when W invests $80,000 for 20 percent interest in the total capital of $440,000.

f

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$80,000
D’s capital account	4,800
M’s capital account	3,200
W’s capital account		88,000

Explanation of Solution

W’s investment of $80,000 for 20 percent or 1/5^t^h of interest

Investment in partnership $80,000

Less: New proportionate book value $440,000 x 1/5

($88,000)

Difference (investment cost < book value) (8,000)

g

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

the entry when W invests $100,000 for 20 percent interest .goodwill to be recorded.

g

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
To record goodwill
Goodwill	$40,000
D’s capital account		24,000
M’s capital account		16,000

To record admission of W
Cash	$100,000
W’s capital account		100,000

Explanation of Solution

Estimation of total capital

1/5 of estimated total resulting capital $100,000

Estimated total resulting capital ($100,000 ÷ 1/5) $500,000

Estimation of goodwill

Estimated total resulting capital $500,000

Less: total net assets excluding goodwill

($360,000 + 100,000) ($460,000)

Estimated goodwill $ 40,000

D’s share of goodwill ($40,000 x .60) $24,000

M’s share of goodwill ($40,000 x .40) $16,000

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I don't need ai answer general accounting question

Charlotte Metals' operating activities for the year are listed below: Beginning inventory $950,600 Ending inventory Purchases Sales revenue $420,700 $825,900 $1,601,850 Operating expenses $720.7* What is the cost of goods sold (COGS) for the year?

Please do not give AI answwr

Answer 2

Question

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.

Chapter 15, Problem 15.11P

a.

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entries when W directly purchases half of M’s investment for $90,000.

a.

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
M’s capital account	80,000
W’s capital account		80,000

Explanation of Solution

M’s investment in partnership is $160,000 half of which is $80,000 credited to W, and W pays $90,000 directly to M. No entry is required for payment as W paid M directly.

b

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests amount needed for one-third interest in partnership’s capital and no goodwill or bonus is recorded.

b

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$180,000
W’s capital account		180,000

Explanation of Solution

Determination of required investment by W


2/3 of total capital	$360,000
Total resulting capital ($360,000 / .6666	$540,000

Amount to be invested by W ($540,000 x 1/3)	$180,000

Then investment by W is debited to cash account and credited to W’s capital account.

c

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests $110,000 for 25 percent interest in partnership and goodwill to be recorded.

c

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$110,000
Goodwill	10,000
W’s capital account		120,000

Explanation of Solution

Estimation of goodwill

As W is investing for 25 percent of interest which is 1/4^t^h of total capital then

¾ estimated total resulting capital = $360,000

Estimated total resulting capital ($360,000 ÷ ¾) = $480,000

Determination of goodwill

Estimated total resulting capital = $480,000

Less: total assets excluding goodwill

($360,000 + 110,000 W’s investment) = ($470,000)

Goodwill =$10,000

d

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests $100,000 for 25 percent interest and inventory account decreased before W’s admission.

d

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
To record write down of inventory
D’s capital account	36,000
M’s capital account	24,000
Inventory		60,000

To record admission of W
Cash	$100,000
W’s capital account		100,000

Explanation of Solution

Determination of write down of inventory

¼ estimated total resulting $100,000

Estimated total resulting capital ($100,000 ÷ ¼) $400,000

Inventory write down =

Estimated total resulting capital = $400,000

Total net assets before inventory write-down $360,000 + $100,000 W’s investment = ($460,000)

Inventory write-down=($60,000)

Value of inventory debit to D’s capital ($60,000 x .60) = $36,000

M’s capital ($60,000 x .40) = $24,000

e

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

Requirement 5

the entry when W purchases 25 percent interest by paying D $80,000 and M $60,000. The value of land is increased before admission.

e

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Entry for revaluation of land
Land account	$200,000
D’s capital account		120,000
M’s capital account		80,000

To record admission of W
D’s capital account	$80,000
M’s capital account	60,000
W’s capital account		140,000

Explanation of Solution

Estimation of total capital

¼ of estimated total capital ($80,000 + $60,000) = $140,000

Estimated total resulting capital ($140,000 ÷ ¼) = $560,000

Estimation of increase in land value

Total estimated resulting capital = $560,000

Less: total net asset before revaluation of land

($200,000 + 160,000) (360,000)

Increase in land $200,000

D’s share in the increase in land value $200,000 x .60 = $120,000

M’s share in the increase in land value $200,000 x .40 = 80,000

f

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

the entry when W invests $80,000 for 20 percent interest in the total capital of $440,000.

f

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$80,000
D’s capital account	4,800
M’s capital account	3,200
W’s capital account		88,000

Explanation of Solution

W’s investment of $80,000 for 20 percent or 1/5^t^h of interest

Investment in partnership $80,000

Less: New proportionate book value $440,000 x 1/5

($88,000)

Difference (investment cost < book value) (8,000)

g

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

the entry when W invests $100,000 for 20 percent interest .goodwill to be recorded.

g

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
To record goodwill
Goodwill	$40,000
D’s capital account		24,000
M’s capital account		16,000

To record admission of W
Cash	$100,000
W’s capital account		100,000

Explanation of Solution

Estimation of total capital

1/5 of estimated total resulting capital $100,000

Estimated total resulting capital ($100,000 ÷ 1/5) $500,000

Estimation of goodwill

Estimated total resulting capital $500,000

Less: total net assets excluding goodwill

($360,000 + 100,000) ($460,000)

Estimated goodwill $ 40,000

D’s share of goodwill ($40,000 x .60) $24,000

M’s share of goodwill ($40,000 x .40) $16,000

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Answer 3

Question

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.

Chapter 15, Problem 15.11P

a.

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entries when W directly purchases half of M’s investment for $90,000.

a.

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
M’s capital account	80,000
W’s capital account		80,000

Explanation of Solution

M’s investment in partnership is $160,000 half of which is $80,000 credited to W, and W pays $90,000 directly to M. No entry is required for payment as W paid M directly.

b

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests amount needed for one-third interest in partnership’s capital and no goodwill or bonus is recorded.

b

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$180,000
W’s capital account		180,000

Explanation of Solution

Determination of required investment by W


2/3 of total capital	$360,000
Total resulting capital ($360,000 / .6666	$540,000

Amount to be invested by W ($540,000 x 1/3)	$180,000

Then investment by W is debited to cash account and credited to W’s capital account.

c

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests $110,000 for 25 percent interest in partnership and goodwill to be recorded.

c

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$110,000
Goodwill	10,000
W’s capital account		120,000

Explanation of Solution

Estimation of goodwill

As W is investing for 25 percent of interest which is 1/4^t^h of total capital then

¾ estimated total resulting capital = $360,000

Estimated total resulting capital ($360,000 ÷ ¾) = $480,000

Determination of goodwill

Estimated total resulting capital = $480,000

Less: total assets excluding goodwill

($360,000 + 110,000 W’s investment) = ($470,000)

Goodwill =$10,000

d

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests $100,000 for 25 percent interest and inventory account decreased before W’s admission.

d

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
To record write down of inventory
D’s capital account	36,000
M’s capital account	24,000
Inventory		60,000

To record admission of W
Cash	$100,000
W’s capital account		100,000

Explanation of Solution

Determination of write down of inventory

¼ estimated total resulting $100,000

Estimated total resulting capital ($100,000 ÷ ¼) $400,000

Inventory write down =

Estimated total resulting capital = $400,000

Total net assets before inventory write-down $360,000 + $100,000 W’s investment = ($460,000)

Inventory write-down=($60,000)

Value of inventory debit to D’s capital ($60,000 x .60) = $36,000

M’s capital ($60,000 x .40) = $24,000

e

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

Requirement 5

the entry when W purchases 25 percent interest by paying D $80,000 and M $60,000. The value of land is increased before admission.

e

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Entry for revaluation of land
Land account	$200,000
D’s capital account		120,000
M’s capital account		80,000

To record admission of W
D’s capital account	$80,000
M’s capital account	60,000
W’s capital account		140,000

Explanation of Solution

Estimation of total capital

¼ of estimated total capital ($80,000 + $60,000) = $140,000

Estimated total resulting capital ($140,000 ÷ ¼) = $560,000

Estimation of increase in land value

Total estimated resulting capital = $560,000

Less: total net asset before revaluation of land

($200,000 + 160,000) (360,000)

Increase in land $200,000

D’s share in the increase in land value $200,000 x .60 = $120,000

M’s share in the increase in land value $200,000 x .40 = 80,000

f

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

the entry when W invests $80,000 for 20 percent interest in the total capital of $440,000.

f

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$80,000
D’s capital account	4,800
M’s capital account	3,200
W’s capital account		88,000

Explanation of Solution

W’s investment of $80,000 for 20 percent or 1/5^t^h of interest

Investment in partnership $80,000

Less: New proportionate book value $440,000 x 1/5

($88,000)

Difference (investment cost < book value) (8,000)

g

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

the entry when W invests $100,000 for 20 percent interest .goodwill to be recorded.

g

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
To record goodwill
Goodwill	$40,000
D’s capital account		24,000
M’s capital account		16,000

To record admission of W
Cash	$100,000
W’s capital account		100,000

Explanation of Solution

Estimation of total capital

1/5 of estimated total resulting capital $100,000

Estimated total resulting capital ($100,000 ÷ 1/5) $500,000

Estimation of goodwill

Estimated total resulting capital $500,000

Less: total net assets excluding goodwill

($360,000 + 100,000) ($460,000)

Estimated goodwill $ 40,000

D’s share of goodwill ($40,000 x .60) $24,000

M’s share of goodwill ($40,000 x .40) $16,000

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Answer 4

Question

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.

Chapter 15, Problem 15.11P

a.

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entries when W directly purchases half of M’s investment for $90,000.

a.

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
M’s capital account	80,000
W’s capital account		80,000

Explanation of Solution

M’s investment in partnership is $160,000 half of which is $80,000 credited to W, and W pays $90,000 directly to M. No entry is required for payment as W paid M directly.

b

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests amount needed for one-third interest in partnership’s capital and no goodwill or bonus is recorded.

b

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$180,000
W’s capital account		180,000

Explanation of Solution

Determination of required investment by W


2/3 of total capital	$360,000
Total resulting capital ($360,000 / .6666	$540,000

Amount to be invested by W ($540,000 x 1/3)	$180,000

Then investment by W is debited to cash account and credited to W’s capital account.

c

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests $110,000 for 25 percent interest in partnership and goodwill to be recorded.

c

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$110,000
Goodwill	10,000
W’s capital account		120,000

Explanation of Solution

Estimation of goodwill

As W is investing for 25 percent of interest which is 1/4^t^h of total capital then

¾ estimated total resulting capital = $360,000

Estimated total resulting capital ($360,000 ÷ ¾) = $480,000

Determination of goodwill

Estimated total resulting capital = $480,000

Less: total assets excluding goodwill

($360,000 + 110,000 W’s investment) = ($470,000)

Goodwill =$10,000

d

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests $100,000 for 25 percent interest and inventory account decreased before W’s admission.

d

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
To record write down of inventory
D’s capital account	36,000
M’s capital account	24,000
Inventory		60,000

To record admission of W
Cash	$100,000
W’s capital account		100,000

Explanation of Solution

Determination of write down of inventory

¼ estimated total resulting $100,000

Estimated total resulting capital ($100,000 ÷ ¼) $400,000

Inventory write down =

Estimated total resulting capital = $400,000

Total net assets before inventory write-down $360,000 + $100,000 W’s investment = ($460,000)

Inventory write-down=($60,000)

Value of inventory debit to D’s capital ($60,000 x .60) = $36,000

M’s capital ($60,000 x .40) = $24,000

e

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

Requirement 5

the entry when W purchases 25 percent interest by paying D $80,000 and M $60,000. The value of land is increased before admission.

e

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Entry for revaluation of land
Land account	$200,000
D’s capital account		120,000
M’s capital account		80,000

To record admission of W
D’s capital account	$80,000
M’s capital account	60,000
W’s capital account		140,000

Explanation of Solution

Estimation of total capital

¼ of estimated total capital ($80,000 + $60,000) = $140,000

Estimated total resulting capital ($140,000 ÷ ¼) = $560,000

Estimation of increase in land value

Total estimated resulting capital = $560,000

Less: total net asset before revaluation of land

($200,000 + 160,000) (360,000)

Increase in land $200,000

D’s share in the increase in land value $200,000 x .60 = $120,000

M’s share in the increase in land value $200,000 x .40 = 80,000

f

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

the entry when W invests $80,000 for 20 percent interest in the total capital of $440,000.

f

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$80,000
D’s capital account	4,800
M’s capital account	3,200
W’s capital account		88,000

Explanation of Solution

W’s investment of $80,000 for 20 percent or 1/5^t^h of interest

Investment in partnership $80,000

Less: New proportionate book value $440,000 x 1/5

($88,000)

Difference (investment cost < book value) (8,000)

g

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

the entry when W invests $100,000 for 20 percent interest .goodwill to be recorded.

g

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
To record goodwill
Goodwill	$40,000
D’s capital account		24,000
M’s capital account		16,000

To record admission of W
Cash	$100,000
W’s capital account		100,000

Explanation of Solution

Estimation of total capital

1/5 of estimated total resulting capital $100,000

Estimated total resulting capital ($100,000 ÷ 1/5) $500,000

Estimation of goodwill

Estimated total resulting capital $500,000

Less: total net assets excluding goodwill

($360,000 + 100,000) ($460,000)

Estimated goodwill $ 40,000

D’s share of goodwill ($40,000 x .60) $24,000

M’s share of goodwill ($40,000 x .40) $16,000

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Answer 5

Chapter 15, Problem 15.11P

a.

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entries when W directly purchases half of M’s investment for $90,000.

a.

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
M’s capital account	80,000
W’s capital account		80,000

Explanation of Solution

M’s investment in partnership is $160,000 half of which is $80,000 credited to W, and W pays $90,000 directly to M. No entry is required for payment as W paid M directly.

b

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests amount needed for one-third interest in partnership’s capital and no goodwill or bonus is recorded.

b

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$180,000
W’s capital account		180,000

Explanation of Solution

Determination of required investment by W


2/3 of total capital	$360,000
Total resulting capital ($360,000 / .6666	$540,000

Amount to be invested by W ($540,000 x 1/3)	$180,000

Then investment by W is debited to cash account and credited to W’s capital account.

c

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests $110,000 for 25 percent interest in partnership and goodwill to be recorded.

c

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$110,000
Goodwill	10,000
W’s capital account		120,000

Explanation of Solution

Estimation of goodwill

As W is investing for 25 percent of interest which is 1/4^t^h of total capital then

¾ estimated total resulting capital = $360,000

Estimated total resulting capital ($360,000 ÷ ¾) = $480,000

Determination of goodwill

Estimated total resulting capital = $480,000

Less: total assets excluding goodwill

($360,000 + 110,000 W’s investment) = ($470,000)

Goodwill =$10,000

d

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests $100,000 for 25 percent interest and inventory account decreased before W’s admission.

d

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
To record write down of inventory
D’s capital account	36,000
M’s capital account	24,000
Inventory		60,000

To record admission of W
Cash	$100,000
W’s capital account		100,000

Explanation of Solution

Determination of write down of inventory

¼ estimated total resulting $100,000

Estimated total resulting capital ($100,000 ÷ ¼) $400,000

Inventory write down =

Estimated total resulting capital = $400,000

Total net assets before inventory write-down $360,000 + $100,000 W’s investment = ($460,000)

Inventory write-down=($60,000)

Value of inventory debit to D’s capital ($60,000 x .60) = $36,000

M’s capital ($60,000 x .40) = $24,000

e

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

Requirement 5

the entry when W purchases 25 percent interest by paying D $80,000 and M $60,000. The value of land is increased before admission.

e

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Entry for revaluation of land
Land account	$200,000
D’s capital account		120,000
M’s capital account		80,000

To record admission of W
D’s capital account	$80,000
M’s capital account	60,000
W’s capital account		140,000

Explanation of Solution

Estimation of total capital

¼ of estimated total capital ($80,000 + $60,000) = $140,000

Estimated total resulting capital ($140,000 ÷ ¼) = $560,000

Estimation of increase in land value

Total estimated resulting capital = $560,000

Less: total net asset before revaluation of land

($200,000 + 160,000) (360,000)

Increase in land $200,000

D’s share in the increase in land value $200,000 x .60 = $120,000

M’s share in the increase in land value $200,000 x .40 = 80,000

f

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

the entry when W invests $80,000 for 20 percent interest in the total capital of $440,000.

f

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$80,000
D’s capital account	4,800
M’s capital account	3,200
W’s capital account		88,000

Explanation of Solution

W’s investment of $80,000 for 20 percent or 1/5^t^h of interest

Investment in partnership $80,000

Less: New proportionate book value $440,000 x 1/5

($88,000)

Difference (investment cost < book value) (8,000)

g

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

the entry when W invests $100,000 for 20 percent interest .goodwill to be recorded.

g

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
To record goodwill
Goodwill	$40,000
D’s capital account		24,000
M’s capital account		16,000

To record admission of W
Cash	$100,000
W’s capital account		100,000

Explanation of Solution

Estimation of total capital

1/5 of estimated total resulting capital $100,000

Estimated total resulting capital ($100,000 ÷ 1/5) $500,000

Estimation of goodwill

Estimated total resulting capital $500,000

Less: total net assets excluding goodwill

($360,000 + 100,000) ($460,000)

Estimated goodwill $ 40,000

D’s share of goodwill ($40,000 x .60) $24,000

M’s share of goodwill ($40,000 x .40) $16,000

Answer 6

Chapter 15, Problem 15.11P

a.

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entries when W directly purchases half of M’s investment for $90,000.

a.

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
M’s capital account	80,000
W’s capital account		80,000

Explanation of Solution

M’s investment in partnership is $160,000 half of which is $80,000 credited to W, and W pays $90,000 directly to M. No entry is required for payment as W paid M directly.

Answer 7

Chapter 15, Problem 15.11P

a.

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entries when W directly purchases half of M’s investment for $90,000.

Answer 8

a.

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
M’s capital account	80,000
W’s capital account		80,000

Answer 9

a.

Expert Solution

Answer 10

a.

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

M’s investment in partnership is $160,000 half of which is $80,000 credited to W, and W pays $90,000 directly to M. No entry is required for payment as W paid M directly.

Answer 13

b

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests amount needed for one-third interest in partnership’s capital and no goodwill or bonus is recorded.

b

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$180,000
W’s capital account		180,000

Explanation of Solution

Determination of required investment by W


2/3 of total capital	$360,000
Total resulting capital ($360,000 / .6666	$540,000

Amount to be invested by W ($540,000 x 1/3)	$180,000

Then investment by W is debited to cash account and credited to W’s capital account.

Answer 14

b

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests amount needed for one-third interest in partnership’s capital and no goodwill or bonus is recorded.

Answer 15

b

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$180,000
W’s capital account		180,000

Answer 16

b

Expert Solution

Answer 17

b

Expert Solution

Answer 18

Expert Solution

Answer 19

Explanation of Solution

Determination of required investment by W


2/3 of total capital	$360,000
Total resulting capital ($360,000 / .6666	$540,000

Amount to be invested by W ($540,000 x 1/3)	$180,000

Then investment by W is debited to cash account and credited to W’s capital account.

Answer 20

c

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests $110,000 for 25 percent interest in partnership and goodwill to be recorded.

c

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$110,000
Goodwill	10,000
W’s capital account		120,000

Explanation of Solution

Estimation of goodwill

As W is investing for 25 percent of interest which is 1/4^t^h of total capital then

¾ estimated total resulting capital = $360,000

Estimated total resulting capital ($360,000 ÷ ¾) = $480,000

Determination of goodwill

Estimated total resulting capital = $480,000

Less: total assets excluding goodwill

($360,000 + 110,000 W’s investment) = ($470,000)

Goodwill =$10,000

Answer 21

c

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests $110,000 for 25 percent interest in partnership and goodwill to be recorded.

Answer 22

c

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$110,000
Goodwill	10,000
W’s capital account		120,000

Answer 23

c

Expert Solution

Answer 24

c

Expert Solution

Answer 25

Expert Solution

Answer 26

Explanation of Solution

Estimation of goodwill

As W is investing for 25 percent of interest which is 1/4^t^h of total capital then

¾ estimated total resulting capital = $360,000

Estimated total resulting capital ($360,000 ÷ ¾) = $480,000

Determination of goodwill

Estimated total resulting capital = $480,000

Less: total assets excluding goodwill

($360,000 + 110,000 W’s investment) = ($470,000)

Goodwill =$10,000

Answer 27

d

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests $100,000 for 25 percent interest and inventory account decreased before W’s admission.

d

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
To record write down of inventory
D’s capital account	36,000
M’s capital account	24,000
Inventory		60,000

To record admission of W
Cash	$100,000
W’s capital account		100,000

Explanation of Solution

Determination of write down of inventory

¼ estimated total resulting $100,000

Estimated total resulting capital ($100,000 ÷ ¼) $400,000

Inventory write down =

Estimated total resulting capital = $400,000

Total net assets before inventory write-down $360,000 + $100,000 W’s investment = ($460,000)

Inventory write-down=($60,000)

Value of inventory debit to D’s capital ($60,000 x .60) = $36,000

M’s capital ($60,000 x .40) = $24,000

Answer 28

d

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

The entry when W invests $100,000 for 25 percent interest and inventory account decreased before W’s admission.

Answer 29

d

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
To record write down of inventory
D’s capital account	36,000
M’s capital account	24,000
Inventory		60,000

To record admission of W
Cash	$100,000
W’s capital account		100,000

Answer 30

d

Expert Solution

Answer 31

d

Expert Solution

Answer 32

Expert Solution

Answer 33

Explanation of Solution

Determination of write down of inventory

¼ estimated total resulting $100,000

Estimated total resulting capital ($100,000 ÷ ¼) $400,000

Inventory write down =

Estimated total resulting capital = $400,000

Total net assets before inventory write-down $360,000 + $100,000 W’s investment = ($460,000)

Inventory write-down=($60,000)

Value of inventory debit to D’s capital ($60,000 x .60) = $36,000

M’s capital ($60,000 x .40) = $24,000

Answer 34

e

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

Requirement 5

the entry when W purchases 25 percent interest by paying D $80,000 and M $60,000. The value of land is increased before admission.

e

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Entry for revaluation of land
Land account	$200,000
D’s capital account		120,000
M’s capital account		80,000

To record admission of W
D’s capital account	$80,000
M’s capital account	60,000
W’s capital account		140,000

Explanation of Solution

Estimation of total capital

¼ of estimated total capital ($80,000 + $60,000) = $140,000

Estimated total resulting capital ($140,000 ÷ ¼) = $560,000

Estimation of increase in land value

Total estimated resulting capital = $560,000

Less: total net asset before revaluation of land

($200,000 + 160,000) (360,000)

Increase in land $200,000

D’s share in the increase in land value $200,000 x .60 = $120,000

M’s share in the increase in land value $200,000 x .40 = 80,000

Answer 35

e

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

Requirement 5

the entry when W purchases 25 percent interest by paying D $80,000 and M $60,000. The value of land is increased before admission.

Answer 36

e

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Entry for revaluation of land
Land account	$200,000
D’s capital account		120,000
M’s capital account		80,000

To record admission of W
D’s capital account	$80,000
M’s capital account	60,000
W’s capital account		140,000

Answer 37

e

Expert Solution

Answer 38

e

Expert Solution

Answer 39

Expert Solution

Answer 40

Explanation of Solution

Estimation of total capital

¼ of estimated total capital ($80,000 + $60,000) = $140,000

Estimated total resulting capital ($140,000 ÷ ¼) = $560,000

Estimation of increase in land value

Total estimated resulting capital = $560,000

Less: total net asset before revaluation of land

($200,000 + 160,000) (360,000)

Increase in land $200,000

D’s share in the increase in land value $200,000 x .60 = $120,000

M’s share in the increase in land value $200,000 x .40 = 80,000

Answer 41

f

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

the entry when W invests $80,000 for 20 percent interest in the total capital of $440,000.

f

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$80,000
D’s capital account	4,800
M’s capital account	3,200
W’s capital account		88,000

Explanation of Solution

W’s investment of $80,000 for 20 percent or 1/5^t^h of interest

Investment in partnership $80,000

Less: New proportionate book value $440,000 x 1/5

($88,000)

Difference (investment cost < book value) (8,000)

Answer 42

f

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

the entry when W invests $80,000 for 20 percent interest in the total capital of $440,000.

Answer 43

f

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
Cash	$80,000
D’s capital account	4,800
M’s capital account	3,200
W’s capital account		88,000

Answer 44

f

Expert Solution

Answer 45

f

Expert Solution

Answer 46

Expert Solution

Answer 47

Explanation of Solution

W’s investment of $80,000 for 20 percent or 1/5^t^h of interest

Investment in partnership $80,000

Less: New proportionate book value $440,000 x 1/5

($88,000)

Difference (investment cost < book value) (8,000)

Answer 48

g

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

the entry when W invests $100,000 for 20 percent interest .goodwill to be recorded.

g

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
To record goodwill
Goodwill	$40,000
D’s capital account		24,000
M’s capital account		16,000

To record admission of W
Cash	$100,000
W’s capital account		100,000

Explanation of Solution

Estimation of total capital

1/5 of estimated total resulting capital $100,000

Estimated total resulting capital ($100,000 ÷ 1/5) $500,000

Estimation of goodwill

Estimated total resulting capital $500,000

Less: total net assets excluding goodwill

($360,000 + 100,000) ($460,000)

Estimated goodwill $ 40,000

D’s share of goodwill ($40,000 x .60) $24,000

M’s share of goodwill ($40,000 x .40) $16,000

Answer 49

g

To determine

Admission of partner: Changes in the membership of partnership occurs with the addition of new partners or disassociation of present partners. New partners often bring additional capital or needed expertise. A new partner can only be admitted with unanimous approval of all the existing partners, further public announcements are made about admission of partner. Section 306 of Uniform partnership act UPA 1997 states that a new partners are not liable for any liability incurred before new partners admitted. Thus, a new partner can be charged for partnership liabilities of existing partnership to the extent of capital contribution at the time of admission.

the entry when W invests $100,000 for 20 percent interest .goodwill to be recorded.

Answer 50

g

Expert Solution

Answer to Problem 15.11P

	Debit	Credit
To record goodwill
Goodwill	$40,000
D’s capital account		24,000
M’s capital account		16,000

To record admission of W
Cash	$100,000
W’s capital account		100,000

Answer 51

g

Expert Solution

Answer 52

g

Expert Solution

Answer 53

Expert Solution

Answer 54

Explanation of Solution

Estimation of total capital

1/5 of estimated total resulting capital $100,000

Estimated total resulting capital ($100,000 ÷ 1/5) $500,000

Estimation of goodwill

Estimated total resulting capital $500,000

Less: total net assets excluding goodwill

($360,000 + 100,000) ($460,000)

Estimated goodwill $ 40,000

D’s share of goodwill ($40,000 x .60) $24,000

M’s share of goodwill ($40,000 x .40) $16,000

Answer 55

Ch. 15 - Prob. 15.1Q Ch. 15 - Prob. 15.2Q Ch. 15 - Prob. 15.3Q Ch. 15 - Prob. 15.4Q Ch. 15 - Under what circumstances would a partner’s capital...Ch. 15 - Prob. 15.6Q Ch. 15 - Prob. 15.7Q Ch. 15 - Prob. 15.8Q Ch. 15 - Prob. 15.9Q Ch. 15 - Prob. 15.10Q

Concept explainers

Answer to Problem 15.11P

Explanation of Solution

Answer to Problem 15.11P

Explanation of Solution

Answer to Problem 15.11P

Explanation of Solution

Answer to Problem 15.11P

Explanation of Solution

Answer to Problem 15.11P

Explanation of Solution

Answer to Problem 15.11P

Explanation of Solution

Answer to Problem 15.11P

Explanation of Solution

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