Question

In: Accounting

Admitting New Partners Who Buy an Interest and Contribute Assets The capital accounts of Trent Henry...

Admitting New Partners Who Buy an Interest and Contribute Assets

The capital accounts of Trent Henry and Tim Chou have balances of $142,500 and $102,800, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $32,800 and one-fourth of Chou’s interest for $22,600. Clarke contributes $34,800 cash to the partnership, for which she is to receive an ownership equity of $34,800.

a1. Journalize the entry to record the admission of Gilbert. For a compound transaction, if an amount box does not require an entry, leave it blank.

a2. Journalize the entry to record the admission of Clarke.

b. What are the capital balances of each partner after the admission of the new partners?

Partner	Capital Balance
Trent Henry	$
Tim Chou	$
LeAnne Gilbert	$
Becky Clarke	$

Calculator

Print Item

Admitting New Partner With Bonus

Cody Jenkins and Lacey Tanner formed a partnership to provide landscaping services. Jenkins and Tanner shared profits and losses equally. After all the tangible assets have been adjusted to current market prices, the capital accounts of Cody Jenkins and Lacey Tanner have balances of $69,000 and $90,000, respectively. Valeria Solano has expertise with using the computer to prepare landscape designs, cost estimates, and renderings. Jenkins and Tanner deem these skills useful; thus, Solano is admitted to the partnership at a 30% interest for a purchase price of $43,000.

a. Determine the recipient and amount of the partner bonus.
$

b. Provide the journal entry to admit Solano into the partnership. For a compound transaction, if an amount box does not require an entry, leave it blank.

c. Why would a bonus be paid in this situation?

Apparently, Jenkins and Tanner value offered by Solano.

Expert Solution

Hi

Let me know in case you face any issue:

ekkarill92 answered 2 years ago

The capital accounts of Trent Henry and Tim Chou have balances of $142,900 and $85,800, respectively....

The capital accounts of Trent Henry and Tim Chou have balances of $142,900 and $85,800, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $31,400 and one-fourth of Chou’s interest for $20,200. Clarke contributes $74,500 cash to the partnership, for which she is to receive an ownership equity of $74,500. Required: a. On December 31, journalize the entries to record the admission of (1) Gilbert and (2) Clarke. Refer...

The capital accounts of Trent Henry and Tim Chou have balances of $146,000 and $93,800, respectively....

The capital accounts of Trent Henry and Tim Chou have balances of $146,000 and $93,800, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $29,100 and one-fourth of Chou’s interest for $21,300. Clarke contributes $69,400 cash to the partnership, for which she is to receive an ownership equity of $69,400. Required: A. On December 31, journalize the entries to record the admission of (1) Gilbert and (2) Clarke. Refer...

Majid and Rashid are partners in a firm. Their capital accounts as on 1st April 2019...

Majid and Rashid are partners in a firm. Their capital accounts as on 1st April 2019 showed a balance of OMR 100,000 and OMR 200,000 respectively. On 1st July 2019 Majid introduced additional capital of OMR 40,000 and Rashid OMR 50,000. On 1st October Majid withdrew OMR 20,000 and 1st January 2020 Rashid withdrew OMR 10,000 from their capitals. Interest on capital is 6% and interest on drawings is 8% per annum the accounting period ends on March 31st every...

How networking capital, depreciation, and interest influence the decision to buy or not to buy when...

How networking capital, depreciation, and interest influence the decision to buy or not to buy when making capital investment decisions

1. Tomas and Saturn are partners who share income in the ratio of 3:1. Their capital...

1. Tomas and Saturn are partners who share income in the ratio of 3:1. Their capital balances are $83,600 and $38,300, respectively. The partnership generated net income of $40,800. What is Tomas's capital balance after closing the revenue and expense accounts to the capital accounts? a.$118,530 b.$108,788 c.$129,157 d.$114,200 2. Tomas and Saturn are partners who share income in the ratio of 3:1. Their capital balances are $80,000 and $120,000, respectively. The partnership generated net income of $30,000. What is...

Current assets Current liabilities Cash $72,000 Accounts payable $12,000 Accounts receivable 18,000 Interest payable 12,000 Interest...

Current assets Current liabilities Cash $72,000 Accounts payable $12,000 Accounts receivable 18,000 Interest payable 12,000 Interest receivable 1,000 Inventory 60,000 Total current assets $151,000 Total current liabilities $24,000 Long-term assets Long-term liabilities Equipment (net of depreciation) $128,000 Note payable 100,000 Total long-term assets $128,000 Total long-term liabilities $100,000 Equity Common stock 10,000 Paid-in capital 50,000 Retained earnings 95,000 Total equity $155,000 Total assets 279,000 Total liabilities and equity $279,000 Yes the difference between account payable and accounts receivable is required....

The ABC partnership has three partners, A, B, and C, who each has an equal interest...

The ABC partnership has three partners, A, B, and C, who each has an equal interest in partnership capital, profits, and losses. To pay off expenses incurred by the partnership, C contributed additional capital on October 31 of the current year. As a result of C's contribution, the partners' interests in the partnership capital, profits, and losses changed to 25% for A, 25% for B, and 50% for C. The partnership is an accrual method, calendar year taxpayer. a) If...

Working capital assets are comprised of cash, accounts receivables, and inventory. Is one more important to...

Working capital assets are comprised of cash, accounts receivables, and inventory. Is one more important to manage than another? Why? Why not? Which of these are the most difficult to manage? How does the accounting basis (cash vs. accrual) an organization chooses change your response, especially in regards to accounts receivables?

Explain the process of establishing new accounts for fixed assets that will be depreciated like equipment....

Explain the process of establishing new accounts for fixed assets that will be depreciated like equipment. Why is accumulated depreciation set up with a negative beginning balance? What is the purpose of depreciation? What financial benefits does deprecation add to the organization?

After the tangible assets have been adjusted to current market prices, the capital accounts of Brad...

After the tangible assets have been adjusted to current market prices, the capital accounts of Brad Paulson and Drew Webster have balances of $45,000 and $60,000, respectively. Austin Neel is to be admitted to the partnership, contributing $30,000 cash to the partnership, for which he is to receive an ownership equity of $35,000. All partners share equally in income. Required: A. On December 31, journalize the entry to record the admission of Neel, who is to receive a bonus of...