Question

In Wildhorse Co., capital balances are Irey $37,100 and Pedigo $46,900. The partners share income equally....

In Wildhorse Co., capital balances are Irey $37,100 and Pedigo $46,900. The partners share income equally. Vernon is admitted to the firm with a 44% interest by an investment of cash of $43,400.

Journalize the admission of Vernon. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit

  
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Answer #1
Capital of partners before admission 84000
Add: Capital introduced by new partner 43400
Capital after admission 127400
Share of capital of new partner 44%
Capital of new partner should be 56056
Bonus to new partner (56056-43400) 12656
(to be borne by old partners equally)
Journal entry
S.no. Accounts title and explanations Debit $ Credit $
a. Cash account 43,400
Irey Capital (12656*1/2) 6328
Pedigo capital (12656*1/2) 6328
     Vernon Capital account 56056
(for capital introduced)
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