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)
$
125,000
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
percent interest,...
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)
$
70,000
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)
$
80,000
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
the admission of new partner under bonus method.
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
method is used b. If Sergio invests $150,000 in cash in the
business for a 25 percent...
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 $ 140,000Adams 120,000Fergie 110.000Gomez 100.000 Total capital $470,000Answer each of the following independent questions:a. Assume that the partners share profits and losses 3.3.2.2, respectively. Fergie retires and is paid $140,000 based on the terms of the original partnership agreement. If the goodwill method is used, what is the capital balance of the remaining three partners? b. Assume that the partners share profits and losses 4.3:2:1, respectively Pineda retires and is...
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
paid $312,000 based on the terms of the original partnership
agreement. If the goodwill method is used, what is the capital
balance of the remaining three partners? Assume that the...
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
$
290,000
Adams
260,000
Fergie
250,000
Gomez
240,000
Total capital
$
1,040,000
Answer each of the following independent questions:
a. Assume that the partners share profits and losses 3:3:2:2,
respectively. Fergie retires and is paid $280,000 based on the
terms of the original partnership agreement. If the goodwill method
is used, what is the capital balance of the remaining three
partners?
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
the end of the current year:
Pineda
$
310,000
Adams
270,000
Fergie
240,000
Gomez
220,000
Total capital
$
1,040,000
Answer each of the following independent questions:
Assume that the partners share profits and losses 3:3:2:2,
respectively. Fergie retires and is paid $285,000 based on the
terms of the original partnership agreement. If the goodwill method
is used, what is the capital balance of the remaining three
partners?
Assume that the...
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
$
210,000
Adams
190,000
Fergie
180,000
Gomez
170,000
Total capital
$
750,000
Answer each of the following
independent questions:
Assume that the partners share profits and losses 3:3:2:2,
respectively. Fergie retires and is paid $211,000 based on the
terms of the original partnership agreement. If the goodwill method
is used, what is the capital balance of the remaining three
partners?
Assume that the...
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