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Journal Entries for Partnership Profits

Chang and Danos share partnership profits and losses at 60% and 40%, respectively. The partners agree to admit Flint into the partnership for a 50% interest in capital and earnings. Capital accounts immediately before the admission of Flint are:

Chang (60%)
$ 300,000

Danos (40%)
$ 300,000

Total
$ 600,000

Prepare the journal entry(s) and defend your reasoning process for the admission of Flint to the partnership assuming Flint invested $400,000 for the ownership interest. Flint paid the money directly to Chang and to Danos for 50% of each of their respective capital interests. The partnership records goodwill.

Prepare the journal entry(s) and defend your reasoning process for the admission of Flint to the partnership assuming Flint invested $500,000 for the ownership interest. Flint paid the money to the partnership for a 50% interest in capital and earnings. The partnership records goodwill.

Prepare the journal entry(s) and defend your reasoning process for the admission of Flint to the partnership assuming Flint invested $700,000 for the ownership interest. Flint paid the money to the partnership for a 50% interest in capital and earnings. The partnership records goodwill

Solution Summary

The journal entries are drawn up in an attached Excel spreadsheet where calculations can be traced by highlighting the cell in question.

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