The Allie and May Partnership has partner capital account balances as follows: A
ID: 2417893 • Letter: T
Question
The Allie and May Partnership has partner capital account balances as follows:
Allie, Capital $350,000
May, Capital 450,000
The partners share income and losses in the ratio of 70% to Allie and 30% to May.
****Instructions Prepare the journal entry on the books of the partnership to record the admission of Eric as a new partner under the two independent circumstances.
1. Eric pays $200,000 to Allie and $250,000 to May for one-half of each of their ownership interest in a personal transaction.
2. Eric invests $700,000 in the partnership for a one-third interest in partnership capital.
Explanation / Answer
1.
Allie capital 175,000
May capital 225,000
Eric Capital 400,000
(For Allie and May ownership transferred to Eric)
2.
Cash A/c 700,000
Eric capital account 500,000
Allie capital account 150,000
May capital account 50,000
(For proportionate share received from Eric for 1/3rd share in ownership)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.