The Prince-Robbins partnership has the following capital account balances on Jan

Question

The Prince-Robbins partnership has the following capital account balances on January 1, 2015: LO 14-9 Prince is allocated 80 percent of all profits and losses with the remaining 20 percent assigned to Robbins after interest of 10 percent is given to each partner based on beginning capital balances. On January 2, 2015, Jeffrey invests $37,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the goodwill method. After this transaction, 10 percent interest is still to go to each partner. Profits and losses will then be split as follows: Prince (50 percent), Robbins (30 percent), and Jeffrey (20 percent). In 2015, the partnership reports a net income of $15,000.

Explanation / Answer

**** Capital BAlance of Existing partner not provided. hence it may assumed and used to calculate interest on capital. however, same question i had solved earlier, that's why i have taken the amount such figure. If you are having different figure, you can use it.

Journal Entry Date Account Tittle & Explanation Debit Credit 02/01/2015 Goodwill $18,000 P's Capital ($18000*80%) $14,400 R's Capital ($18000*20%) $3,600 To record Distribution of Goodwill 02/01/2015 Cash $37,000 J Capital $37,000 To Record Capital Contribution of Jeffrey's

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