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The Struter Partnership has total partners’ equity of $510,000, which is made up of Main, Capital, $400,000, and Frist, Capital, $110,000. The partners share net income and loss in a ratio of 80% to Main and 20% to Frist. On November 1, Adison is admitted to the partnership and given a 15% interest in the equity and a 15% share in any income and loss.Prepare the journal entry to record the admission of Madison under each of the following separate assumptions: Madisoninvests cash of (1) $90,000; (2) $120,000; and (3) $80,000.

Respuesta :

TomShelby

Answer:

a)

cash   90,000 debit

   Adison      90,000 credit

b)

cash 120,000 debit

   Adison    94,500  credit

   Main        20,400  credit

   First           5,100   credit

c)

cash 80,000 debit

Main   6,800 debit

First     1,700 debit

   Adison    88,500  credit

Explanation:

Main 400,000  80%

First   110,000   20%

400,000 + 110,000 + 90,000 = 600,000

600,000 x 15% = 90,000

the amoutn investment matches the proportional amount thus, we don't touch the other accounts

(2)

400,000 + 110,00 + 120,000 = 630,000

630,000 x 15% = 94,500

120,000 - 94,500 = 25,500

as the amount invested is above the proportional amount

we should make a contribution in behalf of the previous ownes

25,500 x 80% main 20,400

25,500 x 20% first      5,100

(3)

400,000 + 110,00 + 80,000 = 590,000

590,000 x 15% = 88,500

80,000 - 88,500 = -8,500

In this case there is a loss and should be distributed among the prevous partners:

8,500 x 80% main = 6,800

8,500 x 20% first   =  1,700

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