Journal Entries for Partnership Profits
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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
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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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