Jim Welch and Sam Thayer share partnership income on a 3:2 basis. They have capital balances of $560,000 and $280,000, respectively, when Bill Ryan is admitted to the partnership. Instructions Prepare the journal entry to record the admission of Ron Ryan under each of the following assumptions: (a) Ryan invests $320,000 for a 25% ownership interest. (b) Ryan invests $300,000 for a 30% ownership interest.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Problem 7:
Jim Welch and Sam Thayer share partnership income on a 3:2 basis. They have capital balances of $560,000 and $280,000, respectively, when Bill Ryan is admitted to the partnership.
Instructions
Prepare the
(a) Ryan invests $320,000 for a 25% ownership interest.
(b) Ryan invests $300,000 for a 30% ownership interest.
Trending now
This is a popular solution!
Step by step
Solved in 6 steps
