Fred and Walden are partnets who share profits and losses in a ratio of 3:2, res

Question

Fred and Walden are partnets who share profits and losses in a ratio of 3:2, respectively, and have the following capital balances on September 30, 20xx Fred, Capital Walden, Capital $25, 000 Cr. $50,000 Cr. The partners agree to admit Miller to the partnership. Provide the General Journal entry for each situation. a. Miller pays Fred $25,000 for 50 percent of his interest. b. Miller invests $25,000 for a one-fourth interest in the partnership. c. Miller invests $25,000 for a 30 percent interest in the partnership. d. Miller invests $25,000 for a 20 percent interest in the partnership.

Explanation / Answer

Solution:

Preparing the Journal Entries for each of the Situation:

Date General Journal Debit Credit a Fred, Capital $25,000 Miller, Capital $25,000 b Cash $25,000 Miller, Capital $25,000 c Cash $25,000 Miller, Capital $25,000 d Cash $25,000 Fred, Capital ($25,000 - $20,000) * 60% $3,000 Walden, Capital ($25,000 - $20,000) * 40% $2,000 Miller, Capital ($75,000 + $25,000) * 20% $20,000

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