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partnership capital balances
partnership capital balances
| Assume the partnership of Dean, Hardin, and Roth has been in existence for a number of years. Dean decides to withdraw from the partnership when the partners’ capital balances are as follows: An appraisal of the business and its property estimates the fair value to be $ 100,000. Dean has agreed to receive $64,000 in exchange for his |
| 1. | Prepare the journal entry for the payment to Dean in the dissolution of his partnership interest, assuming the bonus method is to be applied. |
| 2. | What are the remaining partners’ capital balances after Dean’s interest is dissolved, assuming the bonus method is applied? |
| On January 1, 2011, Lamb and Mona LLP admitted Noris to a 20% interest in net assets for an investment of $50,000 cash. Prior to the admission of Noris, Lamb and Mona had net assets of $100,000 and an income-sharing ratio of 25% to Lamb and 75% to Mona. After the admission of Noris, the partnership contract included the following provisions: Salary of $40,000 a year to Noris. Remaining net income in ratio Lamb 20%, Mona 60%, Noris 20% During the fiscal year ended December 31, 2011, the partnership had income of $90,000 prior to recognition of salary to Noris. |
| 3. | Record the journal entry for the admission of Noris. Goodwill is not to be recorded. |
| 4. | Record the journal entry to allocate the salary of Noris. |
| 5. | Record the journal entry to record the remainder of net income to the capital accounts. |
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