At April 30, partners capital balances in SKG Company are: S. Seger $52,000, J. Kensington $54,000, and

Question:

At April 30, partners’ capital balances in SKG Company are: S. Seger $52,000, J. Kensington $54,000, and T. Gomez $18,000. The income sharing ratios are 5:4:1, respectively.

On May 1, the SKGA Company is formed by admitting D. Atchley to the firm as a partner.

Instructions

(a) Journalize the admission of Atchley under each of the following independent assumptions.

(1) Atchley purchases 50% of Gomez’s ownership interest by paying Gomez $16,000 in cash.

(2) Atchley purchases 331⁄3% of Kensington’s ownership interest by paying Kensington $15,000 in cash.

(3) Atchley invests $66,000 for a 30% ownership interest, and bonuses are given to the old partners.

(4) Atchley invests $46,000 for a 30% ownership interest, which includes a bonus to the new partner.

(b) Kensington’s capital balance is $32,000 after admitting Atchley to the partnership by investment. If Kensington’s ownership interest is 20% of total partnership capital, what were?

(1) Atchley’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...