Ch15 Goodwill A BB

Ch15 Goodwill A BB - 2. Goodwill Procedure Journal entry to...

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Pat and Mike are partners with capital balances of $50,000 and $40,000, respectively, and they share profits and losses equally. They admit Sid for a 30% interest for a cash investment of $60,000. 1. Bonus Procedure (Assets not revalued) Journal entry to record Sid's admission: Cash 60,000 Pat, Capital 7,500 Mike, Capital 7,500 Sid, Capital 45,000 Old capital of $90,000 + $60,000 investment = $150,000 new capital. New balances: Pat $57,500; Mike $47,500; Sid $45,000 = $150,000.
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Unformatted text preview: 2. Goodwill Procedure Journal entry to record revaluation: Goodwill 50,000 Pat, Capital 25,000 Mike, Capital 25,000 Investment of $60,000/30% interest = $200,000 implied total capital. Total capital $200,000 - ($90,000 old capital + $60,000 new investment) = $50,000 goodwill. Journal entry to record admission of Sid: Cash 60,000 Sid, Capital 60,000 New balances: Pat $75,000; Mike $65,000; Sid $60,000 = $200,000. INVESTMENT IN AN EXISTING PARTNERSHIP...
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