Question

Instructions – Admitting new partner with bonus

L. Bowers and V. Lipscomb are partners in Elegant Event Consultants. Bowers and Lipscomb share income equally. M. Ortiz will be admitted to the partnership. Prior to the admission, equipment was revalued downward by $8,000. The capital balances of each partner are $96,000 and $40,000, respectively, prior to the revaluation.

Refer to the Chart of Accounts for exact wording of account titles. Scroll down to access pages 10 and 11 of the journal.

A. On December 31, provide the journal entry for the asset revaluation.

JOURNAL

1

2

3

B. On December 31, provide the journal entry for Ortiz’s admission under the following independent situations:

1. Ortiz purchased a 20% interest for $20,000.

JOURNAL

1

2

3

4

Explanation

2. Ortiz purchased a 30% interest for $60,000.

JOURNAL

1

2

3

4

 

Required:

A.

On December 31, provide the journal entry for the asset revaluation. Refer to the Chart of Accounts for exact wording of account titles.

B.

On December 31, provide the journal entry for Ortiz’s admission under the following independent situations (refer to the Chart of Accounts for exact wording of account titles):

1.

Ortiz purchased a 20% interest for $20,000.

2.

Ortiz purchased a 30% interest for $60,000.

 



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