Question

QS 12-6 Admission of a partner LO P3

Jules and Johnson are partners, each with $56,100 in their partnership capital accounts. Kwon is admitted to the partnership by investing $56,100 cash.
  
Prepare the entry to show Kwon’s admission to the partnership.

Record the admission of Kwon with an investment of $56,100.

QS 12-7 Partner admission through purchase of interest LO P3

Stein agrees to pay Choi and Amal $12,600 each for a one-third (33 1⁄3%) interest in the Choi and Amal partnership. Immediately prior to Stein’s admission, each partner had a $37,800 capital balance.
  
Prepare the journal entry to record Stein's purchase of the partners' interest.

Record Stein's purchase of one-third interest by paying Choi and Amal's $12,600 each.

Serial Problem Business Solutions LO P3

At the start of 2016, Santana Rey is considering adding a partner to her business. She envisions the new partner taking the lead in generating sales of both services and merchandise for Business Solutions. S. Rey’s equity in Business Solutions as of January 1, 2016, is reflected in the following capital balance.
  

S. Rey, Capital

$

80,600

  
Required:
2. Prepare the January 1, 2016, journal entries necessary to admit a new partner to Business Solutions through the purchase of a partnership interest for each of the following two separate cases: (a) 1:1 sharing agreement and (b) 4:1 sharing agreement.

Record the admission of a new partner at a 1:1 ownership interest.

Record the admission of a new partner at a 4:1 ownership interest.

Answer 1

12-6) Journal Entry :-

Particulars	Debit($)	Credit($)
Cash A/c Dr.	56100
To Kwon A/c		56100

12-7) Journal Entry :-

Particulars	Debit($)	Credit($)
Choi's Capital A/c Dr.	12600
Amal's Capital A/c Dr.	12600
To Stein's Capital A/c		25200

LO P3) Journal Entries :-

a)

Date	Particulars	Debit($)	Credit($)
Jan 1	Cash A/c Dr.	80600
	To New Partner's Capital A/c		80600

Capital Ratio = 1 : 1

New Partner's Capital = S. Ray's Capital / S. Ray's Capital

= $80600 / 1

= $80600

b)

Date	Particulars	Debit($)	Credit($)
Jan 1	Cash A/c Dr.	20150
	To New Partner's Capital A/c		20150

Capital Ratio = 4 : 1

New Partner's Capital = S. Ray's Capital / S. Ray's Capital Ratio

= $80600 / 4

= $20150