Exercise D-8 Admission of new partner LO P3 The Struter Partnership has total pa

Question

Exercise D-8 Admission of new partner LO P3 The Struter Partnership has total partners' equity of $560,000, which is made up of Main, Capital, $392,000, and Frist, Capital, $168,000. The partners share net income and loss in a ratio of 82% to Main and 18% to Frist. On November 1 , Madison is admitted to the partnership and given a 20% interest in equity and a 20% share in any income and loss. Prepare journal entries to record the admission of Madison for a 20% interest in the equity and a 20% share (1) Record the admission of Madison with an investment of $140,000 for a 20% interest in the equity and a 2 Record the admission of Madison with an investment of $175,000 for a 20% interest in the equity and a (3) Record the admission of Madison with an investment of $110,000 for a 20% interest in the equity and a in any income and loss under the following independent assumptions. 20% share in any income and loss 20% share in any income and loss. 20% share in any income and loss. View transaction list Journal entry worksheet 2 3 Record the admission of Madison with an investment of $140,000 for a 20% interest in the equity and a 20% share in any income and loss. Note: Enter debits before credits. ransaction General Journal Debit Credit

Explanation / Answer

Transaction General Journal Debit Credit 1 Cash 140000 Madision Capital 140000 (560000+140000)*20% = 140000 2 Cash 175000 Madision Capital 147000 Main Capital 22960 First Capital 5040 3 Cash 110000 Main Capital 19680 First Capital 4320 Madision Capital 134000 2 560000+175000 735000 735000*20% 147000 175000-147000 28000 28000*82% 22960 28000*18% 5040 3 560000+110000 670000 670000*20% 134000 110000-134000 -24000 -24000*82% -19680 -24000*18% -4320

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