Question

HH and נR are fashion designers who agreed to form a partnership to open a dothing store. An attorney prepares the partnership agreement, indicates that assets invested in the partnership will be recorded at their fair market value and that liabilities will be assumed at book value. The assets contributed by each partner and the liabilities assumed by the partnership follow. Assets Cash Accounts receivable Allowance for uncollectible accounts Book value Allowance for uncollectible accounts Fair Value Supplies НН 80,000 104,000 ,000 6,000 2,000 60,000 40,000 15,000 Book Value Fair Value 35 20 Accumulated de Liabilities 64,000 Prepare the journal entry to record the investment of each partner separately The partners of the HH and JR partnership agree to admit a new partner LV into the partnership. Below is the information about the partnership at the time of LVs admission OR 145,460 Capital balance Profit /loss sharing ratio (3:2 200,540 60% LV agrees to pay $50,000 for a 10% interest in the partnership. Make the journal entry to admit LV assuming that: a) LV purchases 10% of the business interest (assignment of interest) for $50,000 directly from HH and JR and the bonus method is used. Prepare the journal entry to record the sale b) LV purchases 10% of the business interest (assignment of interest) for $50,000 directly from the partnership under the bonus method The Partnership is giving a bonus to the new partner so LV gets 15% of the partnership for $50,000 d) Assume HH decides to sell all of his Partnership interest directly to LV for $350,000. Prepare the journal entry to record this sale Partners Ruby, Stanley and Thomas have following capital balances and income distribution ratios Stanley $30,000 Ruby $50,000 $20,000 Prepare the journal entry to record the withdrawal under the three assumptions below (1) Thomas retires and receives $9,000 from each of the remaining partners. Each remaining partner assume one-half of Thomas' interest (2) Thomas retires and receives $16,000 from the partnership (3) Thomas retires and receives $25,000 from the partnership. Tom Sawyer retired from Tom, Jerry, and Mickey Partnership with the below capital and income sharing ratio. Tom was paid $100,000 in full settlement of his interest in the partnership, What is the total agreed upon goodwill of the firm P/L ratio 2596 Beg. Bal 60,000 $40,000 30,000 Tom Sawyer erry Steward Mickey Stevens
Answer all

Answer 1

Answer-3

HH		JR
Cash A/c Dr. Accounts receivable A/c Dr. Allowance for uncollectible accounts (FV) Dr. Supplies Dr. Equipments (FV) Dr. To Accounts Payable To Capital Account	80000 104000 6000 2000 40000 64000 168000	Cash A/c Dr. Accounts receivable A/c Dr. Allowance for uncollectible accounts (FV) Dr. Supplies Dr. Equipments (FV) Dr. To Accounts Payable To Capital Account	60000 40000 4000 1000 20000 18000 107000

Narration for both : Being Assets recorded at FV and Liability recorded at Book Value

Answer - 4

Total Captial after admission = 200540 + 145460 + 50000 = 3,96,000

a) Purchase from Partners :

Paid to HH (50000 * 60%) = 30000

Paid to JR 50000 * 40% = 20000

Entries :

HH's Captial Ac Dr. Goodwill To LV

20054 9946 30000

(being 10% purchased from HH)

JR's Captial Ac Dr. Goodwill To LV

14546 5454 20000

(being 10% purchased from JR)

b)

HH's Capital Ac Dr. JR's Captial Ac Dr. Goodwill To LV's Capital

20054 14546 15400 50000

((being LV admitted to partnership)

c) Total capital after admission = 200540+145460+50000 = 396000

15% of 396000 = 59400

HH's Capital Ac Dr. JR's Captial Ac Dr. Cash To LV's Capital

5640 3760 50000 59400

(Being LV admitted for 15% and loss beared by HH & JR)

d) Total Capital before admission = 346000

60% of 346000 = 207600

Amount received from LV = 350000

Goodwill = 350000-207600 = 142400

HH's Capital Ac Dr. Goodwill (HH's Share) Dr. Goodwill (207600-200540) Dr. To LV's Capital

200540 142400 7060 350000

(being HH share purchased by LV)

Answer - 5

(1)

Thomas's Capital A/c Dr. To Ruby To Stanley To Goodwill

20000 9000 9000 2000

(2)

Thomas's Capital A/c Dr. To Cash Ac To Goodwill

20000 16000 4000

(3)

Thomas's Capital A/c Dr. Goodwill Dr. To Cash

20000 5000 25000

Answer - 6

Amount Received by Tom = 100000

Capital of Tom = 60000

Goodwill received = 100000-60000 = 40000

Tom's Share in firm = 25%

Tom Received 40000 for 25%

Therefore total Goodwill of firm = 40000/25% = 160000

Total Goodwill = $ 1,60,000