Question

At April 30, partners' capital balances in Oriole Company are G. Donley $45,200, C. Lamar $49,200, and J. Pinkston $20,000. The income sharing ratios are 5 : 4:1, respectively. On May 1, the PDLT Company is formed by admitting J. Terrell to the firm as a partner. Journalize the admission of Terrell under each of the following independent assumptions. (Credit account titles are automatically indented when amount is entered Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) (1) Terrell purchases 50% of Pinkston's ownership interest by paying Pinkston $16,000 in cash. (2) Terrell purchases 334/3% of Lamar's ownership interest by paying Lamar $14,800 in cash. (3) Terrell invests $64,200 for a 30% ownership interest, and bonuses are given to the old partners. (4) Terrell invests $40,000 for a 30% ownership interest, which includes a bonus to the new partner. No. Account Titles and Explanation Debit Credit 1. V 2. 3. V V 4. V LINK TO TEXT Lamar's capital balance is $30,000 after admitting Terrell to the partnership by investment. If Lamar's ownership interest is 20% of total partnership capital, what were (1) Terrell's cash investment and (2) the bonus to the new partner? (1) Terrell's cash investment $ (2) Bonus to new partner Click if you would like to Show Work for this question: Open Show Work

Answer 1

Answer Requirement 1: Prepare the journal entries as follows S.No. Credit Debit $8,000 1 Account Title and Explanation Pinkston - Capital ($16,000 50%) Terrell - Capital To record 50% interest purchased by Terrell from Pinkston $8,000 2 $16,400 Lamar - Capital ($49,200 x 1/3) Terrell - Capital To record 33 1/3% nterest purchased by Terrell from Lamar $16,400 3 $64,200 Cash Donley - Capital ($10,620 x 50%) Lamar - Capital ($10,620 x 40%) Pinkston - Capital ($10,620 x 10%) Terrell - Capital To record investment by Terrell $5,310 $4,248 $1,062 $53,580 Notes: Compute bonus to old partners as follows Particulars Donley Lamar Pinkston Terrell Total capital of partnership Terrell capital credit ($178,600 x 30%) Amount $45,200 $49,200 $20,000 $64,200 $178,600 $53,580 Particulars Investment by Terrell Deduct: Terrell capital credit ($178,600 x 30%) Bonus to old partners Amount $64,200 $53,580 $10,620 4 $40,000 Cash Donley - Capital ($6,320 x 50%) Lamar - Capital ($6,320 x 40%) Pinkston - Capital ($6,320 x 10%) Terrell - Capital To record investment by Terrell $3,160 $2,528 $632 $46,320 Notes: Compute bonus to new partner as follows Particulars Donley Lamar Pinkston Terrell Total capital of partnership Terrell capital credit ($154,400 x 30%) Amount $45,200 $49,200 $20,000 $40,000 $154,400 $46,320 Particulars Investment by Terrel Deduct: Terrell capital credit ($154,400 x 30%) Bonus to new partner Amount $40,000 $46,320 ($6,320) Requirement 2: compute cash investment and bonus to new partner as follows Amount $150,000 Particulars Total capital after Terrell admitted ($30,000 / 20%) Deduct: Capital - old partners Donley Lamar Pinkston Terrell's cash investment ($45,200) ($49,200) ($20,000) $35,600 Particulars Decrease in Capital - Lamar ($49,200 - $30,000) • Lamer' income ratio Bonus to Terrell Amount $19,200 40% $48,000