Question

Zeller, Acker, and Benton are partners with capital balances as follows: Zeller, $89,000; Acker, $74,000; and Benton, $152,000. The partners share profits and losses in a 3:2:5 ratio. Dent is admitted to the partnership on May 1, 2017, with a 25% equity. Prepare General Journal entries to record the entry of Dent into the partnership under each of the following unrelated assumptions:

a. Dent invests $105,000:

Record the admission of Dent.

b. Dent invests $70,000:

Record the Dent’s admission and bonus.

c. Dent invests $136,000:

Record the admission of Dent and bonus to old partners.

Answer 1

Solution a:

Total capital of existing partners = $89,000 + $74,000 + $152,000 = $315,000

Capital invested by Dent = $105,000

Total capital after new capital introduced by Dent = $315,000 + $105,000 = $420,000

Dent share in partnership = 25%

Required share of capital by Dent = $420,000 * 25% = $105,000

Therefore there is no bonus adjustment on admission of dent

Journal Entries - Admission of Partner
Particulars	Debit	Credit
Cash A/c Dr	$105,000.00
To Dent's Capital		$105,000.00
(Being capital on admission of dent in partnership)

Solution b:

Total capital of existing partners = $89,000 + $74,000 + $152,000 = $315,000

Capital invested by Dent = $70,000

Total capital after new capital introduced by Dent = $315,000 + $70,000 = $385,000

Dent share in partnership = 25%

Required share of capital by Dent = $385,000 * 25% = $96,250

As capital invested by Dent is lower than required capital, therefore existing partner will give bonus to dent to cover shortfall of $26,250 in proportion of 3:2:5.

Journal Entries - Admission of Partner
Particulars	Debit	Credit
Cash A/c Dr	$70,000.00
To Dent's Capital		$70,000.00
(Being capital on admission of dent in partnership)
Zeller's Capital A/c Dr ($26,250*3/10)	$7,875.00
Acker's Capital A/c Dr ($26,250*2/10)	$5,250.00
Benton's Capital A/c Dr ($26,250*5/10)	$13,125.00
To Dent's Capital		$26,250.00
(Being bonus distributed to new partner by existing partner)

Solution c:

Total capital of existing partners = $89,000 + $74,000 + $152,000 = $315,000

Capital invested by Dent = $136,000

Total capital after new capital introduced by Dent = $315,000 + $136,000 = $451,000

Dent share in partnership = 25%

Required share of capital by Dent = $451,000 * 25% = $112,750

As capital invested by Dent is higher than required capital, bonus capital of $ 23,250 ($136,000 - $112,750) introduced by Dent will be distributed in existing partner in the ratio of 3:2:5.

Journal Entries - Admission of Partner
Particulars	Debit	Credit
Cash A/c Dr	$136,000.00
To Dent's Capital		$136,000.00
(Being capital on admission of dent in partnership)
Dent's Capital A/c Dr	$23,250.00
To Zeller's Capital ($23,250*3/10)		$6,975.00
To Acker's Capital ($23,250*2/10)		$4,650.00
To Benton's Capital ($23,250*5/10)		$11,625.00
(Being bonus distributed to existing partner by new partner)