Question

Exercise 15-7

Phil Phoenix and Tim Tucson are partners in an electrical repair business. Their respective capital balances are $87,300 and $51,100, and they share profits and losses equally. Because the partners are confronted with personal financial problems, they decided to admit a new partner to the partnership. After an extensive interviewing process they elect to admit Don Dallas into the partnership.

Prepare the journal entry to record the admission of Don Dallas into the partnership under each of the following conditions:

1.		Don acquires one-fourth of Phil’s capital interest by paying $30,500 directly to him.
2.		Don acquires one-fifth of each of Phil’s and Tim’s capital interests. Phil receives $25,900 and Tim receives $15,600 directly from Don.
3.		Don acquires a one-fifth capital interest for a $58,900 cash investment in the partnership. Total capital after the admission is to be $197,300.
4.		Don invests $39,460 for a one-fifth interest in partnership capital. Implicit goodwill is to be recorded.

(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.	Account Titles and Explanation	Debit	Credit
1.
2.
3.
4.
	(To record implicit goodwill)
	(To record investment by Don)

Answer 1

Answer a to phil phoenix, capital ale = $87,300 x 254, = $ 31,825 2. Phil phoenix, capital ale = $87,200 X 2004. = $ 17,460 Tim Tucson, Capi-tal ale = $51,100 x 901 =$10,220 Se Dallas capital - (87,300+ 51,100+58,900 ) x 80%. I 197,300 X 2014- = 39,460 4. Total capital = 39,460/2014 = 197,300 Glood willë 197,300 - 87,200.-51,100 - 39,460 19,440

I No Endi (CE) $21,825 7240 $10.1220 Account Titles fe Explanation.comanews Debit C$) phil phoenixcompi-tal Alc 21,825 To: Don Dallas, capital phil phoenix capital Alc $11,460 Tim Tucson, capital.al.c. To.Dol Dallas, capital I cash €58.900 To Don Dallas, courtal To phil Phoenix j.capital. To Tin Tucsonicapital cashmeresanta promover morena $39.460 To_Don Dakas, capital Good will $19,440.. Tophil phoenixy.capital. The Tim Tucson, capital $39,460 $9720 $9720 $34,460 $9120 $9.720.