The partners of Bentsen & Cole LLP had capital account balances of $45,000 and $25,000, respectively. They shared net income and losses in a 3:1 ratio. Prepare journal entries to record the admission of Diaz to the limited liability partnership under the (1) bonus method, and (2) goodwill method for each of the following assumptions:
Diaz invested a single proprietorship with identifiable assets having a current fair value of $40,000 and liabilities having a current fair value of $10,000 for a 20% interest in the net assets of the partnership. Prior to admitting the new partner the old partners write up assets by $10,000.