Question
In: Accounting
The Distance Plus partnership has the following capital balances at the beginning of the current year:...
The Distance Plus partnership has the following capital balances at the beginning of the current year:
| Tiger (50% of profits and losses) | $ | 85,000 |
| Phil (30%) | 60,000 | |
| Ernie (20%) | 55,000 | |
Each of the following questions should be viewed independently.
If Sergio invests $100,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the bonus method is used.
If Sergio invests $60,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the bonus method is used.
If Sergio invests $72,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the goodwill method is used.
Solutions
Expert Solution
If Sergio invests $100,000 in cash in the business for a 25 percent interest:
| Tiger | 50% | $ 85,000.00 |
| Phil | 30% | $ 60,000.00 |
| Ernie | 20% | $ 55,000.00 |
| $ 200,000.00 | ||
| Sergio Investment | $ 100,000.00 | |
| Total Capital | $ 300,000.00 | |
| 25% (Sergio Capital) | $ 75,000.00 | |
| Bonus to be shared to existing partners | $ 25,000.00 | |
Journal Entry
| Debit | Credit | |
| Cash | $ 100,000.00 | |
| Tiger Capital | $ 12,500.00 | |
| Phil Capital | $ 7,500.00 | |
| Ernie Capital | $ 5,000.00 | |
| Sergio Capital | $ 75,000.00 |
If Sergio invests $60,000 in cash in the business for a 25 percent interest
| Tiger | 50% | $ 85,000.00 |
| Phil | 30% | $ 60,000.00 |
| Ernie | 20% | $ 55,000.00 |
| $ 200,000.00 | ||
| Sergio Investment | $ 60,000.00 | |
| Total Capital | $ 260,000.00 | |
| Sergio Capital | $ 65,000.00 | |
| Bonus to be taken from existing partners | $ 5,000.00 | |
Journal Entry
| Debit | Credit | |
| Cash | $ 60,000.00 | |
| Tiger Capital | $ 2,500.00 | |
| Phil Capital | $ 1,500.00 | |
| Ernie Capital | $ 1,000.00 | |
| Sergio Capital | $ 65,000.00 |
If Sergio invests $72,000 in cash in the business for a 25 percent interest
| Tiger | 50% | $ 85,000.00 |
| Phil | 30% | $ 60,000.00 |
| Ernie | 20% | $ 55,000.00 |
| $ 200,000.00 | ||
| Sergio Investment | $ 72,000.00 | |
| Total Capital | $ 272,000.00 | |
| Implied Value(72000/25%) | $ 288,000.00 | |
| Goodwill | $ 16,000.00 | |
Journal Entry
| Debit | Credit | |
| Goodwill | $ 16,000.00 | |
| Tiger Capital | $ 8,000.00 | |
| Phil Capital | $ 4,800.00 | |
| Ernie Capital | $ 3,200.00 |
| Debit | Credit | |
| Cash | $ 72,000.00 | |
| Sergio Capital | $ 72,000.00 |
ekkarill92 answered 1 year agoRelated Solutions
The Distance Plus partnership has the following capital balances at the beginning of the current year:...
The Distance Plus partnership has the following capital balances
at the beginning of the current year:
Tiger (40% of
profits and losses)
$
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Phil (20%)
95,000
Ernie (40%)
110,000
Each of the following questions should be viewed
independently.
A.If Sergio invests $150,000 in cash in the business for a 30
percent interest, what journal entry is recorded? Assume that the
bonus method is used.
B. If Sergio invests $140,000 in cash in the business for a 30
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The Distance Plus partnership has the following capital balances at the beginning of the current year:...
The Distance Plus partnership has the following capital balances
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$
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Phil (40%)
40,000
Ernie (10%)
55,000
If Sergio invests $60,000 in cash in the business for a 20
percent interest, what journal entry is recorded? Assume that the
goodwill method is used. (If no entry is required for a
transaction/event, select "No journal entry required" in the first
account field.)
The Distance Plus partnership has the following capital balances at the beginning of the current year:...
The Distance Plus partnership has the following capital balances
at the beginning of the current year:
Tiger (40% of
profits and losses)
$
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Phil (40%)
50,000
Ernie (20%)
65,000
Each of the following questions should be viewed
independently.
A. If Sergio invests $100,000 in cash in the business for a 30
percent interest, what journal entry is recorded? Assume that the
bonus method is used. (If no entry is required for a
transaction/event, select "No journal entry required" in...
The Distance Plus partnership has the following capital balances at the beginning of the current year:...
The Distance Plus partnership has the following capital balances
at the beginning of the current year:
Tiger (50% of profits and
losses)
$
100,000
Phil (40%)
70,000
Ernie (10%)
85,000
Each of the following questions should be viewed
independently.
If Sergio invests $100,000 in cash in the business for a 25
percent interest, what journal entry is recorded? Assume that the
bonus method is used.
1. Record
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If Sergio invests $80,000 in...
The Distance Plus partnership has the following capital balances at the beginning of the current year:...
The Distance Plus partnership has the following capital balances
at the beginning of the current year: Tiger (50% of profits and
losses) $ 175,000 Phil (30%) 145,000 Ernie (20%) 160,000 Each of
the following questions should be viewed independently. a. If
Sergio invests $190,000 in cash in the business for a 25 percent
interest, what journal entry is recorded? Assume that the bonus
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The E.N.D. partnership has the following capital balances as of the end of the current year....
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The E.N.D. partnership has the following capital balances as of the end of the current year:...
The E.N.D. partnership has the following capital balances as of
the end of the current year: Pineda $ 310,000 Adams 280,000 Fergie
270,000 Gomez 260,000 Total capital $ 1,120,000 Answer each of the
following independent questions: Assume that the partners share
profits and losses 3:3:2:2, respectively. Fergie retires and is
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$
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260,000
Fergie
250,000
Gomez
240,000
Total capital
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respectively. Fergie retires and is paid $280,000 based on the
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b. Assume...
The E.N.D. partnership has the following capital balances as of the end of the current year:...
The E.N.D. partnership has the following capital balances as of
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$
310,000
Adams
270,000
Fergie
240,000
Gomez
220,000
Total capital
$
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is used, what is the capital balance of the remaining three
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$
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190,000
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