The Distance Plus partnership has the following capital balances at the beginning of the current year: Tiger (50% of profits and losses) $75,000 Phil (20%) $45,000 Ernie (30%) $60,000 Each of the following questions should be viewed independently a. If Sergio invests $60,000 in cash in the business for a 20 percent interest, what journal entry is recorded ? Assume that the bonus method is used. b. If Sergio invests $40,000 in cash in the business for a 20 percent interest, what journal entry is recorded? Assume that the bonus method is used. c. If Sergio invests $50,000 in cash in the business for a 20 percent interest, what journal entry is recorded? Assume that the goodwill method is used.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
The Distance Plus partnership has the following capital balances at the beginning of the current year:
Tiger (50% of
Phil (20%) $45,000
Ernie (30%) $60,000
Each of the following questions should be viewed independently
a. If Sergio invests $60,000 in cash in the business for a 20 percent interest, what
b. If Sergio invests $40,000 in cash in the business for a 20 percent interest, what journal entry is recorded? Assume that the bonus method is used.
c. If Sergio invests $50,000 in cash in the business for a 20 percent interest, what journal entry is recorded? Assume that the
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
