At April 30, partners capital balances in PDL Company are: G. Donley $52,000, C. Lamar $48,000 and

Question:

At April 30, partners’ capital balances in PDL Company are: G. Donley $52,000, C. Lamar $48,000 and J. Pinkston $18,000. The income sharing ratios are 5:4:1, respectively. On May 1, the PDLT Company is formed by admitting J. Terrell to the firm as a partner.

Instructions
(a) Journalize the admission of Terrell under each of the following independent assumptions.(1) Terrell purchases 50% of Pinkston’s ownership interest by paying Pinkston $16,000 in cash.
(2) Terrell purchases 331/3% of Lamar’s ownership interest by paying Lamar $15,000 in cash.
(3) Terrell invests $62,000 for a 30% ownership interest, and bonuses are given to the old partners.
(4) Terrell invests $42,000 for a 30% ownership interest, which includes a bonus to the new partner.
(b) Lamar’s capital balance is $32,000 after admitting Terrell to the by investment. If Lamar’s ownership interest is 20% of total capital, what were
(1) Terrell’s cash investment and (2) the bonus to the new partner?

Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...