Question

Hi I need help completing 2A and 2B. I've attached both question and my work done so far.

Use the following Balance Sheet to answer Ince Sheet to answer questions 1-3: Black & Blue Balance Sheet December 31, 2017 Assets Liabilities Cash $ 10,000 Accounts Payable $ 20.000 119.000 Non-Cash Assets Partner's' Equity Black, Capital Blue, Capital Total Partners' Equity Total liabilities and Partners' Equity 65,000 55.000 120,000 Total Assets 120m Requirements (1, 2, and 3 are independent situations) 1. Suppose White pays Blue $40,000 to buy out Blue. Black approves White as a partner. a. Record the transfer of equity on the partnership books on January 1, 2018. (4 pts) b. Prepare the partnership balance sheet immediately after White is admitted as a partner 02 Ots 2. Suppose White becomes a partner by contributing $20,000 cash on January 1, 2018, to acquire one-fourth interest in the business. a. Compute White's capital balance, and determine whether there's any bonus. If so, who gets the bonus? (2 pts b. Journalize White's contribution in the business. (8 ) Assume the Black & Blue partnership liquidates by selling its non-cash assets for $80.000. Prepare ALL journal entries to liquidate the partnership on January 1, 2018. 22

Answer 1

Q 2 a)

Particulars	Amount
Total Capital of the Firm (a)	120000
Add: Additional capital brought in by White (b)	20000
Total (c=a+b)	140000
For 1/4th Share capital required shall be (d)	35000
Bonus to new partner (e = d - b)	15000

White (new partner admitted) gets the bonus.

Q 2 b)

Date	Particulars	Debit	Credit
Jan. 1, 2018	Cash A/c___________ Dr.	20000	-
	To White's Capital A/c	-	20000
	(Being capital contribution made by White)

Q1 a) Since White has paid to Blue $ 40000 to buy out his share in partnership business and the consideration is not paid to the partnership firm, therefore loss or profit on sell of the share in partnership will be that of Blue.

Entry in the books of Partnership Firm:

Date	Particulars	Debit	Credit
Jan. 1, 2018	Blue's Capital A/c________________Dr.	55000	-
	To White's Capital A/c	-	55000
	(Being admission of new partner by sell of share of old partner)

Q1 b)

Black & Blue
Balance Sheet
December 31, 2017
Assets	Amount ($)	Liabilities	Amount ($)
Cash	20000	Accounts Payable	10000
Non cash Assets	110000
		Partner's Equity
		Black's Capital	65000
		White's Capital	55000
Total	130000	Total	130000

3)