Question

On April 21, 2020, Wilson agrees to invest $30,000 into Quest, a land development partnership in Niagara-on- the-Lake, for a 20% interest in total partnership equity. At the time Wilson is admitted, the existing partners, Beacon and Metcalf, each have a $30,000 capital balance. Prepare the entry on April 21 to record Wilson’s ad- mission to the partnership. Any bonus is to be shared equally by Beacon and Metcalf.

Answer 1

Equity of Wilson is calculated as follows:

Total Equity = ($30,000 + $30,000) + $30,000

= $90,000

Equity of Wilson = $90,000 * 20%

= $18,000

Given that any bonus is to be shared equally by Beacon and Metcalf.

Bonus is to be shared equally by Beacon and Metcalf = ($30,000 - $18,000) * 1/2

= $12,000 *1/2

= $6,000 Each

The journal entry on April 21 to record Wilson’s admission to the partnership is as follows:

Date	Account and Explanation	Debit($)	Credit($)
April 21,	Cash	30,000
2020	Wilson’s Capital		18,000
	Beacon's Capital ($12,000 *1/2)		6,000
	Metcalf's Capital ($12,000 *1/2)		6,000
	(Recorded the admission of partner to the partnership)