Question

Phil Phoenix and Tim Tucson are partners in an electrical repair business. Their respective capital balances are $90,000 and $50,000, and they share profits and losses equally. Because the partners are confronted with personal financial problems, they decided to admit a new partner to the partnership. After an extensive interviewing process they elect to admit Don Dallas into the partnership.

Required:
Prepare the journal entry to record the admission of Don Dallas into the partnership under each of the following conditions:
1. Don acquires one-fourth of Phil's capital interest by paying $30,000 directly to him.
2. Don acquires one-fifth of each of Phil's and Tim's capital interests. Phil receives $25,000 and Tim receives $15,000 directly from Don.
3. Don acquires a one-fifth capital interest for a $60,000 cash investment in the partnership.
Total capital after the admission is to be $200,000.
4. Don invests $40,000 for a one-fifth interest in partnership capital. Implicit goodwill is to be recorded.



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  • CreatedMarch 16, 2015
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