At April 30, partners’ capital balances in Crane Company are G. Donley $ 54,080, C. Lamar $ 49,920, and J. Pinkston $ 18,720. 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. (1) Terrell purchases 50% of Pinkston’s ownership interest by paying Pinkston $ 16,640 in cash.(2) Terrell purchases 331/3% of Lamar’s ownership interest by paying Lamar $ 15,600 in cash.(3) Terrell invests $ 64,480 for a 30% ownership interest, and bonuses are given to the old partners.(4) Terrell invests $ 43,680 for a 30% ownership interest, which includes a bonus to the new partner. Journalize the admission of Terrell under each of the following independent assumptions.

Journal entries are the primary reporting of the transactions taking place in the usual course of…

Answered: At April 30, partners’ capital balances…

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter19: Accounting For Partnerships

Section: Chapter Questions

Problem 4CE

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At April 30, partners’ capital balances in Crane Company are G. Donley $ 54,080, C. Lamar $ 49,920, and J. Pinkston $ 18,720. 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.

(1)		Terrell purchases 50% of Pinkston’s ownership interest by paying Pinkston $ 16,640 in cash.
(2)		Terrell purchases 33¹/₃% of Lamar’s ownership interest by paying Lamar $ 15,600 in cash.
(3)		Terrell invests $ 64,480 for a 30% ownership interest, and bonuses are given to the old partners.
(4)		Terrell invests $ 43,680 for a 30% ownership interest, which includes a bonus to the new partner.