Question

BAC Partnership Balance sheet January 1 2020 Assets Liabilities & capital Cash 180,000 Accounts payable 400,000...

BAC Partnership
Balance sheet
January 1 2020
Assets Liabilities & capital
Cash 180,000 Accounts payable 400,000
Other assets 1,520,000 Lollar, loan 60,000
Aparacio, Loan 80,000 Fox, capital 600,000
Aparicio, capital 340,000
Lollar, capital 380,000
1,780,000 1,780,000
Assume that the assets and liabilities are valued fairly in the balance sheet and the partnership decides to admit Wynn as a new partner with a one-fourth interest.
If Wynn contributes $400,000 for the one-fourth interest and good will is to be recorded, journalize the entry(ies) to record Lollar's entry into the partnership and the recognition of goodwill.

Homework Answers

Answer #1
Old partner capital before admission        1,320,000 (600,000 + 340,000 + 380,000 )
Wynn Investment          400,000
Total Capital after Admission        1,720,000
Wynn share of Interest            430,000 ( 1,720,000 x 1/4 )
Goodwill             30,000 ( 430,000 - 400,000 )

Journal Entry for admission of Wynn

Account Titles Debit Credit
Cash          400,000
Goodwill             30,000
Wynn,Capital        430,000
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