Exercise 12-12 S. Pagan and T. Tabor share income on a 6 : 4 basis. They have ca
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Question
Exercise 12-12
S. Pagan and T. Tabor share income on a 6 : 4 basis. They have capital balances of $100,000 and $60,000, respectively, when W. Wolford is admitted to the partnership.
Prepare the journal entry to record the admission of W. Wolford under each of the following assumptions.
Account Titles and Explanation
Debit
Credit
LINK TO TEXT
Account Titles and Explanation
Debit
Credit
Exercise 12-12
S. Pagan and T. Tabor share income on a 6 : 4 basis. They have capital balances of $100,000 and $60,000, respectively, when W. Wolford is admitted to the partnership.
Prepare the journal entry to record the admission of W. Wolford under each of the following assumptions.
Account Titles and Explanation
Debit
Credit
Cash Distributions Accounts Payable S. Pagan, Capital T. Tabor, Capital W. Wolford, Capital Accounts Receivable
Accounts Receivable T. Tabor, Capital W. Wolford, Capital Distributions Cash S. Pagan, Capital Accounts Payable
W. Wolford, Capital Distributions Accounts Receivable Accounts Payable Cash S. Pagan, Capital T. Tabor, Capital
W. Wolford, Capital Accounts Payable Accounts Receivable Distributions S. Pagan, Capital Cash T. Tabor, Capital
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Investment of $50,000 cash for a 30% ownership interest with a bonus to the new partner. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)Account Titles and Explanation
Debit
Credit
S. Pagan, Capital T. Tabor, Capital W. Wolford, Capital Distributions Accounts Receivable Accounts Payable Cash
S. Pagan, Capital W. Wolford, Capital T. Tabor, Capital Distributions Accounts Receivable Accounts Payable Cash
S. Pagan, Capital Distributions Cash W. Wolford, Capital T. Tabor, Capital Accounts Receivable Accounts Payable
Distributions Accounts Receivable W. Wolford, Capital Cash Accounts Payable T. Tabor, Capital S. Pagan, Capital
Explanation / Answer
1) Total capital after admission og Wolford
(100,000+60,000+90,000) = $250,000
Wolford interest = $250,000@30% = $75,000
Bonus brought = $90,000 - $75,000 = $15,000
Bonus $15,000 distributed in the ratio of 6:4
2) Total capital after admission
(100,000+60,000+50,000) = $210,000
Interest of Wolford $210,000@30% = $63,000
1) Total capital after admission og Wolford
(100,000+60,000+90,000) = $250,000
Wolford interest = $250,000@30% = $75,000
Bonus brought = $90,000 - $75,000 = $15,000
CAsh $90,000 To Wolford capital $75,000 To S. Pagan capiltal 9,000 To T.Tabor capital 6,000Bonus $15,000 distributed in the ratio of 6:4
2) Total capital after admission
(100,000+60,000+50,000) = $210,000
Interest of Wolford $210,000@30% = $63,000
Cash $50,000 S. Pagan capital 7,800 T.Tabor capital 5,200 To Woldford captial $63,000Related Questions
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