Ch15 Goodwill B BB

Ch15 Goodwill B BB - balances: Pat $47,000; Mike $37,000;...

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INVESTMENT IN AN EXISTING PARTNERSHIP Pat and Mike are partners with capital balances of $50,000 and $40,000, respectively. They share profits and losses equally. They admit Sid to a 30% interest for a cash investment of $30,000. 1. Bonus Procedure (Assets not revalued) Journal entry to record Sid's admission: Cash 30,000 Pat, Capital 3,000 Mike, Capital 3,000 Sid, Capital 36,000 Old capital of $90,000 + $30,000 investment = $120,000 new capital. Sid capital = $120,000 new capital x 30% interest = $36,000. Sid's capital credit $36,000 - $30,000 cash payment = $6,000 bonus to new partner. New
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Unformatted text preview: balances: Pat $47,000; Mike $37,000; Sid $36,000 = $120,000 total capital. 2. Goodwill Procedure (Assets revalued) Journal entry to record admission of Sid and revaluation: Cash 30,000 Goodwill 8,571 Sid, Capital 38,571 Old capital $90,000/70% interest retained by old partners = $128,571 new capital. New capital $128,571 - ($90,000 old capital + $30,000 investment) = $8,571. New balances: Pat $50,000; Mike $40,000; Sid $38,571 = $128,571....
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This note was uploaded on 09/30/2011 for the course ECO 472 taught by Professor Kim during the Spring '11 term at CUNY Hunter.

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