On January 1, 2018 John and Jane decide to admit a new partner, Tom, for...
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Accounting
On January 1, 2018 John and Jane decide to admit a new partner, Tom, for a 1/6 interest in the firm for $175,000. The bonus method is used to record the admission of the new partner. After admitting the new partner, the partnership agreement is amended as follows:
Each partner receives 10% interest on his beginning capital balance. Each partner receives an annual salary of $20,000. The residual profit of loss is divided in a ratio of 30% to John, 50% to Jane, and 20% to Tom. Record the journal entry to admission of Tom to the partnership.
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