Lee, Alvarez, and Tyne have a partnership. Their capital balances are $50,000, $
ID: 2357046 • Letter: L
Question
Lee, Alvarez, and Tyne have a partnership. Their capital balances are $50,000, $70,000, and $30,000 respectively. The partner profit percentages are 30%, 40%, and 30%, respectively. They are considering on what basis to admit Patton, a prospective new partner. Based on appraisal analysis, the net assets of the partnership are worth $180,000. Patton is willing to put up cash of $30,000, plus a machine with book value of $12,000 and a fair value of $20,000. Prepare the journal entries necessary to record Patton's admission to the partnership, given in each of the separate scenarios. a. Patton is receiving a 20% share of the partnership with his investment. His admission is recorded using the bonus method. b. Patton is receiving a 30% share of the partnership with his investment. His admission is recorded using the bonus method. c. Patton is receiving a 20% share of the partnership with his investment. His admission is recorded using the goodwill method. d. Patton is receiving a 30% share of the partnership with his investment. His admission is recorded using the goodwill method.Explanation / Answer
A. Cash 30,000
Machine 20,000
Capital Lee 3,000
Capital Alverez 4,000
Capital Tyne 3,000
Capital Patton 40,000
C. Cash 30,000
Machine 20,000
Goodwill 50,000
Capital Lee 15,000
Capital Alverez 20,000
Capital Tyne 15,000
Capital Patton 50,000
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