How to record the admission of new partner


Response to the following problem:

Perry, Thomas, and Johnson are partners in Thomas and Company. Their capital balances and profit and loss sharing ratios on June 30, Year 4, are as follows:

Perry $216,000            4

Thomas 300,000          5

Johnson 159,000         1

Required:

PART A

On July 1, Carnie invests $127,000 for a one-fifth interest in capital.

Prepare journal entries for all of the possible methods available to record the admission of Carnie.

PART B

Assume instead that on July 1, Carnie invests $127,000 for a one-eighth interest in capital.

Prepare journal entries for all of the possible methods available to record the admissionof Carnie.

Solution Preview :

Prepared by a verified Expert
Accounting Basics: How to record the admission of new partner
Reference No:- TGS02122598

Now Priced at $20 (50% Discount)

Recommended (96%)

Rated (4.8/5)