Wallace, Simpson, and Prince are partners and share income and losses in a 3:4:3

Question

Wallace, Simpson, and Prince are partners and share income and losses in a 3:4:3 ratio. The partnership's capital balances are Wallace, $68,000; Simpson, $90,000; and Prince, $42,000. Royal is admitted to the partnership on July 1 with a 20% equity and invests $50,000. The partnership would record the admission of Royal into the partnership as:

Debit Wallace, Capital $15,000; debit Simpson, Capital, $20,000; debit Prince, Capital $15,000; credit Royal, Capital $50,000.

Debit Cash $20,000; credit Prince, Capital $20,000.

Debit Cash $40,000; debit Wallace, Capital $3,000; debit Simpson, Capital, $4,000; debit Prince, Capital $3,000; credit Royal, Capital $50,000.

Debit Cash $50,000; credit Royal, Capital $50,000.

Debit Cash $50,000; credit Simpson, Capital $10,000, credit Royal, Capital $40,000.

Explanation / Answer

The following entries are recording entires of admission of partner Royal

partner bring capital $ 50,000

Debit cash $ 50,000 ; Credit Royal capital A/c $50,000

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