Question

The Struter Partnership has total partners' equity of $320,000, which is made up of Main, Capital, $224,000, and Frist, Capital, $96,000. The partners share net income and loss in a ratio of 76% to Main and 24% to Frist. On November 1, Adison is admitted to the partnership and given a 20% interest in equity and a 20% share in any income and loss.

Prepare journal entries to record the admission of Adison for a 20% interest in the equity and a 20% share in any income and loss under the following independent assumptions.

(1) Record the admission of Adison with an investment of $80,000 for a 20% interest in the equity and a 20% share in any income and loss.

(2) Record the admission of Adison with an investment of $115,000 for a 20% interest in the equity and a 20% share in any income and loss.

(3) Record the admission of Adison with an investment of $50,000 for a 20% interest in the equity and a 20% share in any income and loss.

Record the admission of Madison with an investment of $80,000 for a 20% interest in the equity and a 20% share in any income and loss.

Transaction	General Journal	Debit	Credit
(1)

Record the admission of Madison with an investment of $115,000 for a 20% interest in the equity and a 20% share in any income and loss.

Transaction General Journal Debit Credit (2)

Record the admission of Madison with an investment of $50,000 for a 20% interest in the equity and a 20% share in any income and loss.

Transaction	General Journal	Debit	Credit
(3)

Answer 1

(1) Record the admission of Adison with an investment of $80,000 for a 20% interest in the equity and a 20% share in any income and loss
Total Capital after Admission of Adison =$224,000+$96000+$80,000 =$400000
Adison share of 20% interest in Capital =$400,000*0.20 =$80,000
Journal Entry
Date	Account titles & Explanation	Debit	Credit
Nov-01	Cash A/c	$80000
	To Adison Capital A/c		$80000
	(Being Admision of Adison for 20% interest in capital has been recorded)
(2) Record the admission of Adison with an investment of $115,000 for a 20% interest in the equity and a 20% share in any income and loss
Total Capital after Admission of Adison =$224,000+$96000+$115,000 =$435000
Adison share of 20% interest in Capital =$435,000*0.20 =$87,000
Excess amount paid inexcess of 20% share in capital =$115000-$87000 =$28000
$28000 amount of excess cash , share of Main =$28000*76% =$21280
$28000 amount of excess cash , share of First =$28000*24% =$6720
Journal Entry
Date	Account titles & Explanation	Debit	Credit
Nov-01	Cash A/c	$$115000
	To Adison Capital A/c		$87000
	To Main Capital A/c		$21280
	To First capital A/c		$6720
	(Being Admision of Adison for 20% interest in capital has been recorded)
(3) Record the admission of Adison with an investment of $50,000 for a 20% interest in the equity and a 20% share in any income and loss
Total Capital after Admission of Adison =$224,000+$96000+$50,000 =$370,000
	74000
Adison share of 20% interest in Capital =$370,000*0.20 =$74,000
Excess amount get in capital inexcess of cash paid =$74000-$50000 =$24000
$24000 amount of excess capital , share of Main =$28000*76% =$18240
$24000 amount of excess capital , share of First =$28000*24% =$5760
Journal Entry
Date	Account titles & Explanation	Debit	Credit
Nov-01	Cash A/c	$50000
	Main Capital A/c	$18240
	First capital A/c	$5760
	To Adison Capital A/c		$74000
	(Being Admision of Adison for 20% interest in capital has been recorded)