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Exercise 12-15 Foss, Albertson, and Espinosa are partners who share profits and losses 50%, 30%, and...

Exercise 12-15 Foss, Albertson, and Espinosa are partners who share profits and losses 50%, 30%, and 20%, respectively. Their capital balances are $117,000, $55,000, and $32,000, respectively. Assume Garrett joins the partnership by investing $81,600 for a 25% interest with bonuses to the existing partners. Prepare the journal entry to record his investment. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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Answer #1

Answer:

Total capital of partnership after admission of Garrett = $204,000+ $81,600= $285,600
Garrett share in partnership = 25%
Required capital to be invested by Garrett = $285,600 * 25% = $71,400
Bonus capital invested by Garrett = $81,600 - $71,400 = $10,200

Journal Entries
Event Particulars Debit Credit
1 Cash Dr $81,600
       To Garrett's Capital $71,400
       To Foss's Capital (10200*50%) $5,100
       To Albertson's Capital (10200*30%) $3,060
       To Espinosa's Capital (10200*20%) $2,040
(To record admission of Garrett in partnership)
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