The Distance Plus partnership has the following capital balances at the beginning of the current year: Tiger, (40% of profits and losses) $125,000 Phil (20% ) 95,000 Ernie (40%) 110,000 Each of the following questions should be viewed independently. a. If Sergio invests $150,000 in cash in the business for a 30 percent interest, what journal entry is recorded? Assume that the bonus method is used. b. If Sergio invests $140,000 in cash in the business for a 30 percent interest, what journal entry is recorded? Assume that the bonus method is used. c. If Sergio invests $150,000 in cash in the business for a 30 percent interest, what journal entry is recorded? Assume that the goodwill method is used.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The Distance Plus partnership has the following capital balances at the beginning of the current year:

Tiger, (40% of profits and losses) $125,000
Phil (20% ) 95,000
Ernie (40%) 110,000

Each of the following questions should be viewed independently.


a. If Sergio invests $150,000 in cash in the business for a 30 percent interest, what journal entry is recorded? Assume that the bonus method is
used.


b. If Sergio invests $140,000 in cash in the business for a 30 percent interest, what journal entry is recorded? Assume that the bonus method is
used.


c. If Sergio invests $150,000 in cash in the business for a 30 percent interest, what journal entry is recorded? Assume that the goodwill method is
used.

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