In: Accounting
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 cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the bonus method is used.
2. Record the admission of new partner under bonus method.
If Sergio invests $90,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the goodwill method is used.
1. Record the entry for goodwill allocation, during the admission of a new partner.
2. Record the investment made by the new partner in the business.