In the GMP partnership (to which Elan seeks admittance), the capital balances of Mary, Gene, and Pat, who share income in the ratio of 6:3:1, are
Mary ........ $240,000
Gene ......... 120,000
Pat ......... 40,000
a. If no goodwill or bonus is recorded, how much must Elan invest for a one-third interest?
b. Prepare journal entries for the admission of Elan if she invests $80,000 for a 20 percent interest and goodwill is recorded.
c. Prepare journal entries for the admission of Elan if she invests $200,000 for a 20 percent interest. Total capital will be $600,000; the partners use the bonus method.
d. Elan is concerned that she may be held liable for the partnership liabilities existing on the day she is admitted to the GMP partnership. She found nothing in the partnership agreement on this item. What does the UPA 1997 state with regard to the liability of a new partner for partnership obligations incurred prior to admission?