Question

In Sandhill Co., capital balances are Irey $39,300 and Pedigo $56,900. The partners share income equally....

In Sandhill Co., capital balances are Irey $39,300 and Pedigo $56,900. The partners share income equally. Vernon is admitted to the firm with a 44% interest by an investment of cash of $41,000.

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
Total capital before admission 96200 (39300+56900)
Add: Capital of new partner 41000
Total capital after admission 137200
Multiply: Share of new partner 44%
Capital of new partner should be 60368
Bonus to new partner 19368 (60368-41000)
(to be shared by old partners equally)
Journal entry for admission:
S.no. Accounts title and explanations Debit $ Credit $
a. Cash account 41000
Irey Capital (19368*50%) 9684
Pedigo capital (19368*50%) 9684
      Vernon Capital account 60368
(for capital introduced)
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