Question

The Prince-Robbins partnership has the following capital account balances on January 1, 2015:

  

Prince, Capital	$	110,000
Robbins, Capital		100,000

  

      Prince is allocated 70 percent of all profits and losses with the remaining 30 percent assigned to Robbins after interest of 8 percent is given to each partner based on beginning capital balances.

      On January 2, 2015, Jeffrey invests $61,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the goodwill method. After this transaction, 8 percent interest is still to go to each partner. Profits and losses will then be split as follows: Prince (50%), Robbins (30%), and Jeffrey (20%). In 2015, the partnership reports a net income of $23,000.

  

a.	Prepare the journal entry to record Jeffrey entrance into the partnership on January 2, 2015. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

      

b.	Determine the allocation of income at the end of 2015.

      

Answer 1

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