Respuesta :
The required results are-
a) One-third interest is $222,000.
b) journal entry -Dr Cash- $80,000, Dr Goodwill- 31,000, Dr Elan Capital- $111,000
c) journal entry - Dr Cash - $200,000, Cr Mary Capital- $40,080, Cr Gene Capital- $20,040, Cr Pat Capital- $6,680, Cr Elan Capital- $133,200.
What is journal entry?
A initial recording of financial commercial transactions in the accounts books is known as a journal entry. They are listed in chronological order. In the books of accounts, each business transaction has dual effects, that is, it debits each account and credits another due to a single commercial transaction.
Now, according to the question;
(A) Elan's investment for a one-third stake.
= 666,000×(1/3)
= 222,000
Thus, Elan invest for a one-third interest is $222,000.
(B) The journal entry for the admission of Elan if she invests $80,000 for a 20% interest and goodwill is recorded.
Estimated total capital = $ 555,000
= 444,000/(100-20)
Less total net assets is 524,000
=$444,000 + $80,000
Goodwill to a new partner is estimated to be $31,000.
($ 555,000-$524,000)
Now the Journal entry,
Dr Cash- $80,000
Dr Goodwill- 31,000
Cr Elan, Capital- $111,000 calculated as;
= (444,000×20)/(100-20)
=111,000
Thus, Cr Elan, Capital- $111,000.
(C) The journal entry for Elan's admission if she decides to invest $200,000 for a 20% return.
Amount Invested in partnership $ 20,000
Less the book value of the new partner ($133,200).
=(444,000 + 222,000)×20
= $66,800
Difference- $66,800
($200,000-$133,200)
The Journal entry, in the ratio 6:3:1
Dr Cash - $200,000
Cr Mary, Capital- $40,080
= 66,800×60
Cr Gene, Capital- $20,040
= 66,800×30
Cr Pat, Capital- $6,680
= 66,800×10
Cr Elan, Capital- $133,200
= 66,800×20
As a result, a journal entry is the initial recording of financial business transactions in accounting books.
To know more about the journal entry, here
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The complete question is -
In the GMP partnership (to which Elan seeks admittance), the capital balances of Mary, Gene, and Pat, who share income in the ratio of 6:3:1, are
Mary $266,400
Gene 133,200
Pat 44,400
Required:
a. If no goodwill or bonus is recorded, how much must Elan invest for a one-third interest?
b. Prepare journal entry for the admission of Elan if she invests $80,000 for a 20 percent interest and goodwill is recorded.
c. Prepare journal entry for the admission of Elan if she invests $200,000 for a 20 percent interest. Total capital will be $600,000; the partners use the bonus method.
