Beth. Steph. and Linda have been operating a small gift shop for several years. After an extensive review of their past operating performance, the partners concluded that the business needed to expand in order to provide an adequate return to the partners. 'The following balance sheet is for the partnership prior to the admission of a new partner. Mary.

Figures shown parenthetically reflect agreed profit-and-lass sharing percentages.

Required:

Prepare the necessary journal entries to record the admission of Mary in each of the follow-ing independent situations. Some situations may be recorded in more than one way.

1. Mary is to invest sufficient cash to receive a one-sixth capital interest. The parties agree that the admission is to be recorded without recognizing goodwill or bonus.

2. Mary is to invest 5160.000 for a one-fifth capital interest.

3. Mary is to invest 5160.000 for a one-fourth capital interest.

4. Mary is to invest 5160.000 for a 40% capital interest.

Transcribed Image Text:

Cash Other Assets Liabilities Beth, Capital (40%) Steph, Capital (40%) Linda, Capital (20%) $160,000 640.000 $800,000 $200,000 265,000 215,000 120,000 $800,000 Cash Other Assets Liabilities Beth, Capital (40%) Steph, Capital (40%) Linda, Capital (20%) $160,000 640.000 $800,000 $200,000 265,000 215,000 120,000 $800,000

Answer rating: 100% (QA)

1 Berth Capital 265000 Steph Capital 215000 Linda Capital 120000 Total existing Capital 600000 Existing partners ownership interest 56th Total Capital ... View the full answer