A455 QUIZ1 Solution F09

# A455 QUIZ1 Solution F09 - and losses equally After Eden...

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ACCT 455/555 FALL 2009 QUIZ 1A NAME _________________________________ Eden contributes \$49,000 into the above partnership for a 25% interest. The four original partners share profits and losses equally. Using the bonus method, determine the balances for each of the five partners after Eden joins the partnership. Eden's contribution of \$49,000 into the partnership, raises the total partnership net assets to \$400,000. Eden's capital account is credited, by agreement, for 25% of the partnership's total tangible assets or \$100,000. The journal entry to record the admission of Eden is: The capital balances of each of the five partners after Eden's entry into the partnership are as follows:

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ACCT 455/555 FALL 2009 QUIZ 1B NAME _________________________________ Eden contributed \$124,000 in cash to the business above to receive a 20% interest in the partnership. Goodwill was to be recorded. The four original partners shared all profits
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Unformatted text preview: and losses equally. After Eden made his investment, what were the individual capital balances of each of the five partners? Eden's contribution of \$124,000 to the partnership increases the partnership's net assets to \$475,000. The implied value of the partnership is \$620,000 (\$124,000 ÷ 20%). Goodwill of \$145,000 (\$620,000 - \$475,000) resulted from this transaction. The first entry requires that the goodwill be allocated to each of the original four partners according to their profit and loss sharing percentages. As indicated in the problem, the four original partners share profits and losses equally. After allocating the goodwill to each of the original four partners, their partnership capital balances are as follows: The second step is to record Eden's cash contribution and to record Eden's capital account balance:...
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A455 QUIZ1 Solution F09 - and losses equally After Eden...

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