L. Bowers and V. Lipscomb are partners in Elegant Event Consultants. Bowers and
ID: 2422566 • Letter: L
Question
L. Bowers and V. Lipscomb are partners in Elegant Event Consultants. Bowers and Lipscomb share income equally. M. Ortiz will be admitted to the partnership. Prior to the admission, equipment was revalued downward by $7,400. The capital balances of each partner are $86,800 and $37,800, respectively, prior to the revaluation. Required: A. On December 31, provide the journal entry for the asset revaluation. Refer to the Chart of Accounts for exact wording of account titles. B. On December 31, provide the journal entry for Ortiz’s admission under the following independent situations (refer to the Chart of Accounts for exact wording of account titles): 1. Ortiz purchased a 20% interest for $21,200. 2. Ortiz purchased a 30% interest for $60,400.
Explanation / Answer
1)Journal entry for asset revaluation
Capital after revalaution
L. bowers $86,800 - $3,700 = $83,100
V Lipscomb = $37,800 - $3,700 = $34,100
Total capital after admission 83,100+ 34,100 + 21,200 = 138,400
Interest of Ortiz 138,400 @20% = $27,680
Contributed by Ortiz ( 21,200)
Bonus to Ortiz =$6,480
Situation b
total captial 83,100 + 34,100 + 60,400 = $177,600
Ortiz share 177,600 @30% = 53,280
contribtuion by him = 60,400
Bonus brought by him = 7,120
Entry
L.Bower's captial $3,700 V'Lipscomb's captial 3,700 To Equipment $7,400Related Questions
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