Question

7 The Struter Partnership has total partners' equity of $500,000, which is made up of Main, Capital, $350,000, and Frist, Capital, $150,000. The partners share net income and loss in a ratio of 83% to Main and 17% to Frist. On November 1, Adison is admitted to the partnership and given a 20% interest in equity and a 20% share in any income and loss. 0.66 points Prepare journal entries to record the admission of Adison for a 20% interest in the equity and a 20% share in any income and loss under independent assumption. eBook (1) Record the admission of Adison with an investment of $125,000 for a 20% interest in the equity and a 20% share in any income and loss. (2) Record the admission of Adison with an investment of $160,000 for a 20% interest in the equity and a 20% share in any income and loss. (3) Record the admission of Adison with an investment of $95,000 for a 20% interest in the equity and a 20% share in any income and loss. Hint Print View transaction list References Journal entry worksheet < А B с > Record the admission of Adison with an investment of $125,000 for a 20% interest in the equity and a 20% share in any income and loss. Note: Enter debits before credits. General Journal Debit Credit Transaction (1)

Answer 1

1. When Adison invests $125,000, the total capital will change to $625,000 ($500,000+$125,000). Adison's share is 20% (625,000*20%) = $125,000, the journal entry to record will be

Cash Account	125,000
Adison, Capital		125,000
(To record admission of Adison)

2. When adison brings in 160,000

Total capital = 500,000+160,000 = 660,000

adison's share @20% = 132,000, balance of 28,000 is treated as bonus and divided between Main and Frist in their profit sharing ratio 83:17

Cash Account	160,000
Adison, Capital		132,000
Main, Capital		23,240
Frist, Capital		4,760
(To record admission of Adison @ bonus)

3. When Adison brings in 95,000

Total capital = 500,000+95,000 = 595,000

Adison's share @20% = 119,000, deficit of 24,000 is divided between Main and Frist in their profit sharing ratio 83:17

Cash Account	95,000
Main, Capital	19,920
Frist, Capital	4,080
adison, Capital		119,000
(To record admission of Adison )