Old Exam Questions for Chap 15-16

Old Exam Questions for Chap 15-16 - (Old Exam Question...

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(Old Exam Question). Miller and Davis, partners in a consulting business, share profits and losses in the ratio of 3:2, respectively. Prior to recording the admission of Shaw as a new partner, Miller has a capital balance of $80,000, and Davis has a capital balance of $40,000. Required: For each of the following independent cases, prepare the journal entry that was made to record the admission of Shaw into the partnership. 1) Shaw purchased 20% of the respective capital balances of Miller and Davis, paying $20,000 cash directly to each of them. 2) Shaw invested $40,000 cash into the partnership for a 20% ownership interest. Total capital after recording his admission was $160,000. 3) Shaw invested $50,000 into the partnership for a 20% interest. Goodwill is to be recognized.
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Answer: (21 points) 1. Miller, Capital 16,000 (20%)($80,000) Davis, Capital 8,000 (20%)($40,000) Shaw, Capital 24,000 (20%)($80,000 + $40,000) 2. Cash 30,000 Shaw, Capital 30,000 (20%)($120,000 + $30,000) 3. Cash 40,000
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This note was uploaded on 05/01/2010 for the course MGMT 503 taught by Professor Staff during the Spring '08 term at Purdue.

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Old Exam Questions for Chap 15-16 - (Old Exam Question...

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