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Prepare the journal entry for each scenario
Course:- Accounting Basics
Reference No.:- EM132048567

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Assignment Help >> Accounting Basics

Problem 1 - Todd is interested in investing in Charger partnership for a 30% interest; however, the current partners are concerned how the addition of new partner will impact their current partnership capital accounts. The capital balances at the beginning of the year are Chad (40%) \$80,000; Adam (40%) \$50,000; and Alex (20%) \$65,000.

Prepare the journal entry (in Word or Excel) for each of the following scenarios:

1. Todd invests \$100,000 cash using the bonus method.

2. Todd invests \$75,000 cash using the bonus method.

3. Todd invests \$90,000 cash using the goodwill method.

Problem 2 - ABCD Partnership has decided to dissolve the partnership. As part of dissolution, all the assets will be sold and existing liabilities paid in full.

ABCD Partnership has decided to dissolve the partnership. As part of dissolution, all the assets will be sold and existing liabilities paid in full.

 Assets Cash 65,000 Land 145,000 Building 120,000 Total 330,000

 Liabilities and Capital Liabilities 55,000 Partner A, Capital 81,500 Partner B, Capital 40,000 Partner C, Capital 62,000 Partner D, Capital 91,500 Total liabilities and capital 330,000

Using the information provided above, use Word or Excel to create journal entries that show how each of the following independent scenarios should be handled.

Scenario 1: The \$10,000 cash that exceeds the partnership's liabilities is to be disbursed immediately. If profits and losses are allocated to Partner A, Partner B, Partner C, and Partner D on a 2:3:3:2 basis, respectively, how will the \$10,000 be divided?

Scenario 2: The \$10,000 cash that exceeds the partnership's liabilities is to be disbursed immediately. If profits and losses are allocated to Partner A, Partner B, Partner C, and Partner D on a 2:2:3:3 basis, respectively, how will the \$10,000 be divided?

Scenario 3: The building is immediately sold for \$80,000 to give total cash of \$142,000. Following the sales, the liabilities are paid, leaving a cash balance of \$90,000. This cash is to be distributed to the partners. How will the cash be divided if profits and losses are allocated to Partner A, Partner B, Partner C, and Partner D on a 1:3:3:3 basis, respectively?

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