Question

BE12.11 (LO 5) AP In ABC Co., the capital balances of the partners are A. Ali $30,000; S. Babson $25,000; and K. Carter $36,000. The partners share profit equally. On June 9 of the current year, D. Dutton is admitted to the partnership by purchasing one half of K. Carter's interest for $20,000 paid to him personally. Journalize the admission of Dutton on June 9.

BE12.12 (LO 5) AP In Eastwood partnership, capital balances are Irey $40,000 and Pedigo $50,000. The partners share income equally. Vernon is admitted to the firm with a 45% interest by an investment of cash of $58,000. Journalize the admission of Vernon.

Answer 1

Answer :-

BE12.11 (LO 5) AP -

Date	Particular	Debit	Credit
June 9	K. Carter's , Capital A/c. Dr.	$18,000
	To D. Dutton,Capital A/c		$18,0000
	(To record the admission of Dutton on June 9 )

Explanation :- K. Carter's Total Capital Balance = $ 36,000

D.Dutton purchasing one half of K. Carter's interest .

D.Dutton Capital Balance = 36,000/2 = $18,000

There is no Journal entries for $20,000 Cash as this Cash was D.Dutton was paid to K.Carter's personally.

BE12.12 (LO 5) AP

Date	Particular	Debit	Credit
	Cash A/c Dr.	$58,000
	Irey Capital A/c Dr.(8,600/2)	$4,300
	Pedigo Capital A/c Dr.	$4,300
	To Vernon Capital A/c		$66,600

Explanation :-

Capital of existing partners ($40,000 + $50,000) = $90,000
Investment of new partner Vernon = $ 58,000
Total partnership Capital after New partner = ($90,000 + $58,000) = $148,000

Share of Vernon in Total Partnership Capital = 45% × $148,000 = $66,600

As Share of Vernon is more than his contribution of $58,000, Therefore,the old partners contribute the $8,600 (= $66,600 - $58,000 ) to New Partner.And old partners divided this Amount equally as their profit sharing Ratio of partner is equally.