The capital balances of the DEF Partnership are as follows: Danielson $180,000; Eklund 95,000; Forsberg 150,000...

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The capital balances of the DEF Partnership are as follows: Danielson $180,000; Eklund 95,000; Forsberg 150,000...

The capital balances of the DEF Partnership are as follows: Danielson $180,000; Eklund 95,000; Forsberg 150,000 Total $425,000

The partners' income sharing ratio is: Danielson, 25%; Eklund, 45%; Forsberg, 30%. Assume the partnership’s identifiable net assets are carried at amounts approximating fair value.

Case A: Assume Gustafson joins the partnership by contributing $125,000 to the partnership for a 20% interest in partnership capital.

Case B: Now assume Gustafson paid $90,000 for a 20% interest in partnership capital.

Instruction: For each case, please use Goodwill method to analyze the problem. Prepare the Statement of Partners’ Capital Balances, as well as the related journals prepared for the partnership.

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Answer 1

Answer #1

1 Solution 2 Case A 3 4 5 Existing partners capital = 425,000 New partners investment = 125,000 New partners share -20% paid 1 Solution 2 Case B 3 4 5 Existing partners capital = 425,000 New partners investment = 90000 New partners share -20% paid in

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The capital balances of the DEF Partnership are as follows: Danielson $180,000; Eklund 95,000; Forsberg 150,000...

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