At April 30, partners' capital balances in YBG Company are: Younger $30,000, Beyer $16,000, and Giger $10,000. The income-sharing ratios are 5:3:2, respectively. On May 1, the YBGE Company is formed by admitting Edelman to the firm as a partner.
Instructions
(a)Journalize the admission of Edelman under each of the following independent assumptions.
(1)Edelman purchases 50% of Giger"s ownership interest by paying Giger $4,000 in cash.
(2)Edelman purchases 50% of Beyer"s ownership interest by paying Beyer $10,000 in cash.
(3)Edelman invests $29,000 cash in the partnership for a 40% ownership interest that includes a bonus to the new partner.
(4)Edelman invests $24,000 in the partnership for a 20% ownership interest, and bonuses are given to the old partners.
(b)Beyer"s capital balance is $25,000 after admitting Edelman to the partnership by investment. If Beyer"s ownership interest is 25% of total partnership capital, what were (1) Edelman"s cash investment and (2) the total bonus to the old partners?