Marnie, Stacie, and Samantha are partners in Woodware Company. Their capital balances as of July 31, 2011, are as follows:

Each partner has agreed to admit Connie to the partnership.

Required
1. Prepare the entries in journal form to record Connie's admission to or Marnie's withdrawal from the partnership under each of the following conditions:
a. Connie pays Marnie $12,500 for 20 percent of Marnie's interest in the partnership.
b. Connie invests $20,000 cash in the partnership and receives an interest equal to her investment.
c. Connie invests $30,000 cash in the partnership for a 20 percent interest in the business. A bonus is to be recorded for the original partners on the basis of their capital balances.
d. Connie invests $30,000 cash in the partnership for a 40 percent interest in the business. The original partners give Connie a bonus according to the ratio of their capital balances on July 31, 2011.
e. Marnie withdraws from the partnership, taking $52,500. The excess of withdrawn assets over Marnie's partnership interest is distributed according to the balances of the Capital accounts.
f. Marnie withdraws by selling her interest directly to Connie for $60,000.
2. When a new partner enters a partnership, why would the new partner pay a bonus to the old partners, or why would the old partners pay a bonus to the new partner?

Transcribed Image Text:

MARNE, CAPITAL Dr. STACE, CARTAL Dr. SAMANTHA, CARITAL Dr. Cr. 45,000 Cr. 15,000 Cr. 30,000