The Josetti partnership has total partners equity of $558,000, which is made up

Question

The Josetti partnership has total partners equity of $558,000, which is made up of Dopke, Capital, $392,000, and Hughes, Capital, $166,000. The partners share net income and loss in a ratio of 85% to Dopke and 15% to Hughes. On November 1, Nillsen is admitted to the partnership and given a 10% interest in equity and a 10% share in any income or loss. Prepare the journal entry to record the admission of Nillsen under each of the following separate assumptions: Nillsen invests cash of (1) $62,000; (2) $97,000; (3) $32,000.

Explanation / Answer

When Nillsen invests cash of $162,000:Dopke capital                           392,000 Hughes capital                           166,000 Nillsen investment                       162,000 Total invested capital                   $720,000 Nillsen interest                             10% Book value acquired                   72,000 The journal entry for this transaction is as follows; Cash                                     162,000         Nillsen investment                       72,000         Dupke capital (85% x 90,000)    76,500         Hugh capital (15% x 90,000)      13,500 When Nillsen invests cash of $97,000:Dopke capital                           392,000 Hughes capital                           166,000 Nillsen investment                       97,000 Total invested capital                   $655,000 Nillsen interest                             10% Book value acquired                   65,500 The journal entry for this transaction is as follows; Cash                                     $97,000         Nillsen investment                       65,500         Dupke capital (85% x 90,000)    26,775         Hugh capital (15% x 90,000)      4,725 When Nillsen invests cash of $32,000:Dopke capital                           392,000 Hughes capital                           166,000 Nillsen investment                       32,000 Total invested capital                   $590,000 Nillsen interest                             10% Book value acquired                   59,000 The journal entry for this transaction is as follows; Cash                                     $32,000         Nillsen investment                       (59,000)         Dupke capital (85% x 90,000)    22,950         Hugh capital (15% x 90,000)      4,050

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