Question

Keri & Nick Consulting’s partners’ equity accounts reflected the following balances on August 31, 2020:

     
Keri Lee, Capital    $    58,000      
Nick Kalpakian, Capital        201,000      

Lee and Kalpakian share profit/losses in a 2:3 ratio, respectively. On September 1, 2020, Liam Court is admitted to the partnership with a cash investment of $111,000.

Required:
Prepare the journal entry to record the admission of Liam under each of the following unrelated assumptions, where he is given:

a. A 30% interest in equity

b. A 20% interest in equity

c. A 50% interest in equity

Answer 1

c. A 50% interest in equity

Lee and Kalpakian share profit/losses in a 2:3 ratio,

# On September 1, 2020, Liam Court is admitted to the partnership with a cash investment of $111,000.

Journal entry

	Particulars	DR	CR
September 1, 2020	By Cash A/c	$111,000.
	To New Partner's capital A/c		$111,000.
	(Liam Court is admitted to the partnership with a cash investment of $111,000)

Keri Lee,’s old partner ratio=2

Nick Kalpakian ’old partner share =3

new partner add 1/3 share of future profit, so Now total partner,s are =1/3=3-1=2

so Keri Lee,’s New partner ratio = 2*2=4

Nick Kalpakian,’s New partner ratio(NPSR)=1/3=3-1=2.

2*2=4 , so Keri Lee,’s New partner ratio =3*2=6

Liam Court 'sNew partner ratio=2+3=5*1=5 so new share profit/losses in a 4:6:5 ratio,