Admission of a Partner
Debra and Merina sell electronic equipment and supplies through their partnership. They wish to expand their computer lines and decide to admit Wayne to the partnership. Debra's capital is $200,000, Merina's capital is $160,000, and they share income in a ratio of 3:2, respectively.
Required
Record Wayne's admission for each of the following independent situations:
a. Wayne directly purchases half of Merina's investment in the partnership for $90,000.
b . Wayne invests the amount needed to give him a one-third interest in the partnership's capital if no goodwill or bonus is recorded.
c. Wayne invests $110,000 for a 25 percent interest. Goodwill is to be recorded.
d. Debra and Merina agree that some of the inventory is obsolete. The inventory account is decreased before Wayne is admitted. Wayne invests $100,000 for a 25 percent interest.
e . Wayne directly purchases a 25 percent interest by paying Debra $80,000 and Merina $60,000.
The land account is increased before Wayne is admitted.
f . Wayne invests $80,000 for a 20 percent interest in the total capital of $440,000.
g . Wayne invests $100,000 for a 20 percent interest. Goodwill is to be recorded.