Response to the following problem:
The ABCD Partnership has the following balance sheet at January 1, 20X0, prior to the admission of new partner, E.
| Cash and current assets |
$39,000 |
Liabilities |
$52,000 |
| Land |
234,000 |
A's capital |
26,000 |
| Building and equipment |
130,000 |
B's capital |
52,000 |
|
|
C's capital |
117,000 |
|
|
D's capital |
156,000 |
| Total assets |
$403,000 |
Total liabilities and capital |
$403,000 |
E contributed $124,000 in cash to the business to receive a 20% interest in the partnership. Goodwill was to be recorded. The four original partners shared all profits and losses equally.
Required:
(A) Prepare the journal entries necessary to record goodwill.
(B) After goodwill has been recorded, what were the individual capital balances of the original partners?
(C) Prepare the journal entry necessary to record E's contribution.