The Distance Plus partnership has the following capital balances at the beginning of the current year:
Tiger (50% of profits and losses) | $85,000 |
Phil (30%) | 60,000 |
Ernie (20%) | 55,000 |
Each of the following questions should be viewed independently.
a.If Sergio invests $100,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the bonus method is used.
b.If Sergio invests $60,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the bonus method is used.
c.If Sergio invests $72,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the goodwill method is used.
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