The Prince-Robbins partnership has the following capital account balances on January 1, 2015:

       Prince, Capital…………………………………………………………………………..$70,000

       Robbins, Capital………………………………………………………………………..$60,000

Prince is allocated 60 percent of all profits and losses with the remaining 40 percent assigned to Robbins after the interest of 6 percent is given to each partner based on beginning capital balances.

On January 2, 2015, Jeffrey invests $40,000 cash for 20 percent in the partnership. This transaction is recorded by the goodwill method. After this transaction, 6 percent interest is still to go to each partner. Profits and losses will then be split as follows: Prince (50 percent), Robbins (30 percent), and Jeffrey (20 percent). In 2015, the partnership reports a net income of $15,000.

Required:

1. Prepare the journal entry to record Jeffrey’s entrance into the partnership on January 2, 2015.

2. Determine the allocations of income at the end of 2015.

Answer rating: 100% (QA)

No 1 Prince 70000 Ro bbins capital capital 60 Prince et all profits ROL... View the full answer