Acct240 Financial Accounting: P12-4B At April 30, partners' capital balances in BAB Company

Acct240 Financial Accounting

P12-4B
At April 30, partners' capital balances in BAB Company are: Barney $30,000, Andy $16,000 and Bea $15,000. The income-sharing ratios are 5:3:2, respectively. On May 1, the BABB Company is formed by admitting Ellen to the firm as a partner.

Instructions.
A. Journalize the admission of Ellen under each of the following independent assumptions.
1. Ellen purchases 50% of Bea's ownership interest by paying Bea $6,000 in cash.
2. Ellen purchases 50% of Andy's ownership interest by paying Andy $10,000 in cash.
3. Ellen invests $29,000 cash in the partnership for a 40% ownership interest that includes a bonus to the new partner.
4. Ellen invests $24,000 in the partnership for a 20% ownership interest, and bonuses are given to the old partners.
B. Andy's capital balance is $24,000 after admitting Ellen to the partnership by investment. If Andy's ownership interest is 24$ of total partnership capital, what were (1) Ellen's cash investment, and (2) the total bonus to the old partners?
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