Question

Admission of new partner—Revaluation Assume that Partners A and B have Capital Accounts equal to $720,000...

Admission of new partner—Revaluation
Assume that Partners A and B have Capital Accounts equal to $720,000 and $360,000, respectively. Partner C wants to join the partnership as one-third partner. Partner C contributes $1,530,000 in cash to the partnership in return for a one-third interest. Prior to the admission of Partner C, Partners A and B wish to revalue the long-term assets of the partnership. They obtain an appraisal of the land and building that indicates a current value of $1.8 million. The land and building are currently reported on the partnership balance sheet at $360,000.

Record the journal entry on the books of the partnership to reflect the revaluation of the land and building and the admission of Partner C with a capital contribution of $1,530,000. Assume that despite the evidence of a previously unrecognized intangible asset, the partners do not wish to record the intangible asset.

General Journal
Description Debit Credit
AnswerLand and BuildingsPartner A, CapitalPartner B, CapitalPartner C, CapitalCash Answer Answer
AnswerLand and BuildingsPartner A, CapitalPartner B, CapitalPartner C, CapitalCash Answer Answer
Partner B, Capital Answer Answer
To revalue land and buildings.
AnswerLand and BuildingsPartner A, CapitalPartner B, CapitalPartner C, CapitalCash Answer Answer
Partner A, Capital Answer Answer
Partner B, Capital Answer Answer
AnswerLand and BuildingsPartner A, CapitalPartner B, CapitalPartner C, CapitalCash Answer Answer
To record purchase of partnership interest by C.
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
General Journal
Description Debit Credit
Land and building (1800000 - 360000) $1,440,000
A, Capital ($1,440,000 x 1/2) $720,000
B, Capital ($1,440,000 x 1/2) $720,000
(To revalue land and buildings.)
Cash $1,530,000
Partner A, Capital (180000/2) $90,000
Partner B, Capital (180000/2) $90,000
C, Capital $1,350,000
(To record purchase of partnership interest by C.)
A's capital (720000+720000) 1440000
B's capital(360000+720000) 1080000
C's contribution 1530000
Total owner equity after admitting C (1) $4,050,000
C's share (2) 1/3
C's capital (1x2) (3) $1,350,000
C's contribution (4) 1530000
Bonus to exiting partners (4-3) $180,000
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Admission of new partner-Bonus Method Assume that Partners A and B each report a Capital Account...
Admission of new partner-Bonus Method Assume that Partners A and B each report a Capital Account of $150,000. Partner C wants to join the partnership as an equal one-third partner. Because the partnership has been very profitable, Partners A and B require Partner C to contribute $300,000 in cash to the partnership in return for a one-third interest. Assume that Partners A and B share profits 60% and 40%, respectively, prior to the admission of Partner C. After admission of...
QS 12-6 Admission of a partner LO P3 Jules and Johnson are partners, each with $56,100...
QS 12-6 Admission of a partner LO P3 Jules and Johnson are partners, each with $56,100 in their partnership capital accounts. Kwon is admitted to the partnership by investing $56,100 cash.    Prepare the entry to show Kwon’s admission to the partnership. Record the admission of Kwon with an investment of $56,100. QS 12-7 Partner admission through purchase of interest LO P3 Stein agrees to pay Choi and Amal $12,600 each for a one-third (33 1⁄3%) interest in the Choi...
35) When a new partner is admitted at a higher-than-book-value contribution, the existing partners will receive...
35) When a new partner is admitted at a higher-than-book-value contribution, the existing partners will receive a bonus amount. A. True; ____or B.False ____ 36) Keith and Jim are partners. Keith has a capital balance of $47,000 and Jim has a capital balance of $32,000. Jim sells $15,000 of his ownership to Bill. Which of the following is TRUE of the journal entry to admit Bill? A) Bill, Capital will be debited for $17,000. B) Jim, Capital will be debited...
Admitting New Partners Who Buy an Interest and Contribute Assets The capital accounts of Trent Henry...
Admitting New Partners Who Buy an Interest and Contribute Assets The capital accounts of Trent Henry and Tim Chou have balances of $119,500 and $86,000, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $27,500 and one-fourth of Chou’s interest for $18,900. Clarke contributes $29,200 cash to the partnership, for which she is to receive an ownership equity of $29,200. a1. Journalize the entry to record the admission of...
Partners A and B form a partnership where each receive a 50% interest in capital and...
Partners A and B form a partnership where each receive a 50% interest in capital and profits. Partner A contributes cash of $25,000 and land valued at $25,000. Partner A has a basis in the land of $20,000 and has held it for two years. Partner B contributes equipment (with a basis to B of $15,000 and a fair market value of $30,000) and inventory (with a basis to B of $10,000 and a fair market value of $20,000). Partner...
1. Admitting New Partners Who Buy an Interest and Contribute Assets The capital accounts of Trent...
1. Admitting New Partners Who Buy an Interest and Contribute Assets The capital accounts of Trent Henry and Tim Chou have balances of $187,500 and $135,200, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $43,100 and one-fourth of Chou’s interest for $29,700. Clarke contributes $45,800 cash to the partnership, for which she is to receive an ownership equity of $45,800. a1. Journalize the entry to record the admission...
A partnership of attorneys in the St. Louis, Missouri, area has the following balance sheet accounts...
A partnership of attorneys in the St. Louis, Missouri, area has the following balance sheet accounts as of January 1, 2015: Assets . . . . . . . . . . . . . . . . . . . . . $320,000 Liabilities . . . . . . . . . . . . . . . . . . $120,000 Athos, capital . . . . . . . . . . . . . ....
A partnership of attorneys in the St. Louis, Missouri, area has the following balance sheet accounts...
A partnership of attorneys in the St. Louis, Missouri, area has the following balance sheet accounts as of January 1, 2018: Assets $ 370,000 Liabilities $ 116,000 Athos, capital 98,000 Porthos, capital 88,000 Aramis, capital 68,000 According to the articles of partnership, Athos is to receive an allocation of 50 percent of all partnership profits and losses while Porthos receives 30 percent and Aramis, 20 percent. The book value of each asset and liability should be considered an accurate representation...
After the tangible assets have been adjusted to current market prices, the capital accounts of Grayson...
After the tangible assets have been adjusted to current market prices, the capital accounts of Grayson Jackson and Harry Barge have balances of $44,230 and $63,190, respectively. Lewan Gorman is to be admitted to the partnership, contributing $31,360 cash to the partnership, for which he is to receive an ownership equity of $36,610. All partners share equally in income. Required: a. On December 31, journalize the entry to record the admission of Gorman, who is to receive a bonus of...
Partners A and B form a partnership where each receive a 50% interest in capital and...
Partners A and B form a partnership where each receive a 50% interest in capital and profits. Partner A contributes cash of $25,000 and land valued at $25,000. Partner A has a basis in the land of $20,000 and has held it for two years. Partner B contributes equipment (with a basis to B of $15,000 and a fair market value of $30,000) and inventory (with a basis to B of $10,000 and a fair market value of $20,000). Partner...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT