Problem - The Distance Plus partnership has the following capital balances at the beginning of the current year:
Tiger (40% of profits and losses) $ 155,000
Phil (20%) 125,000
Ernie (40%) 140,000
Each of the following questions should be viewed independently.
a. If Sergio invests $190,000 in cash in the business for a 30 percent interest, what journal entry is recorded? Assume that the bonus method is used.
b. If Sergio invests $170,000 in cash in the business for a 30 percent interest, what journal entry is recorded? Assume that the bonus method is used.
c. If Sergio invests $110,000 in cash in the business for a 20 percent interest, what journal entry is recorded? Assume that the goodwill method is used.