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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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- Spring '10