Phil Phoenix and Tim Tucson are partners in electrical repair business. Their respective capital balances...
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Phil Phoenix and Tim Tucson are partners in electrical repair business. Their respective capital balances are $90,000 and $50,000. and they share profits and losses equally. Because the partners are confronted with personal and financial problems, they decided to admit a new partner to the partnership. After an extensive interviewing process they elect to admit Don Dallas into the partnership. Required: Prepare the journal entry to record the admission of Don Dallas into the partnership under each of the following conditions:
A) Don acquires one-fourth of Phil's capital interest by paying $30,000 directly to him.
Answer using Bonus and Good Will Method
B) Don invests $40,000 for a one-fifth interest in partnership capital. Payment is made to the partnership.
Answer using Bonus and Good Will Method
C) Don acquires one-fifth of each of Phil's and Tim's capital interests. Phil receives $25,000 and Tim receives $15.000 directly from Don.
Answer using Bonus and Good Will Method
D) Don acquires a one-fifth capital interest for a $60,000 cash investment in the partnership. Total capital after the admission is to be $200,000.
Answer using Bonus and Good Will Method
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