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John Jane Beginning Capital Balance Interest on Capital Balance 100000 10000 200000 20000 Annual salary 15000 20000 Remainder 74000 111000 Enli'm_

I was wondering how should I record the journal entry admission of the new partner (Tom) to the partnership?

Allocation of Income of two partner is as follow before having the Third partner:

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 Admission of New Partner

 On January 1, 2018 John and Jane decide to admit a new partner, Tom, for a 1/6 interest in the firm for $175,000. The bonus method is used to record the admission of the new partner. After admitting the new partner, the partnership agreement is amended as follows:

               Each partner receives 10% interest on his beginning capital balance. Each partner receives an annual salary of $20,000. The residual profit of loss is divided in a ratio of 30% to John, 50% to Jane, and 20% to Tom. 

Record the journal entry to admission of Tom to the partnership

22.jpg

John Jane Beginning Capital Balance
Interest on Capital Balance 100000
10000 200000
20000 Annual salary 15000 20000 Remainder 74000 111000 Enli'm_ Cauital Balance 199000 351000

Top Answer

Journal entry at admission of Tom Debit Cash (175000 +... View the full answer

1 comment
  • Tom's capital at the time of admission will be 175000 only. And at the time of John and Jane they will receive 10% of their opening capital + 20000 of annual salary
    • umerchana
    • May 05, 2018 at 3:04pm

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