Assume the partners do wish to record goodwill and no

Reference no: EM13574798

Lion and Tiger had operated as a partnership for a number of years. At June 30, 20XX their balance sheet appeared as below:

LION & TIGER

Balance Sheet, June 30, 20XX

Assets:

Cash	$5,000
Receivables	$30,000
Inventories	$60,000
Equipment (net)	$80,000
Building (net)	$90,000
	$265,000

Liabilities:

Accounts Payable	$34,000
Accrued Liabilities	$6,000
Mortgage Payable	$80,000
Lion, Capital	$75,000
Tiger, Capital	$70,000
	$265,000

Peters is interested in becoming a partner on equal terms with Lion and Tiger. The partners do not wish to have any goodwill exist on their books, and they have carefully studied their various asset values to determine the basis for Peters' investment. It is agreed that prior to admission of Peters, the receivables $66,000. Peters agrees to invest $75,000 for a one-third interest in the partnership. The partners agree that all capital accounts shall be equal after this investment. Assume an expansion.

Required:

1. Prepare Journal entries necessary to reflect the above. How much cash should Tiger pay Lion on a personal basis?

2. Assume the partners DO wish to record goodwill and no adjustments are necessary to the asset values other than goodwill. Prepare journal entries to record transactions. (Do not assume capital accounts are to be equal after entry.)

Reference no: EM13574798

Questions Cloud

The trial balance below was taken from the records of r : the trial balance below was taken from the records of r. martin executor for the estate of j. mitchell on october 31

Joint products a and b are produced in a single operation : joint products a and b are produced in a single operation from material m. three hundred gallons of material m costing

The owner of the house of greens greenhouse wants to : the owner of the house of greens greenhouse wants to estimate the mean height that her seedlings grow. a sample of 14

At the beginning of the year a firm leased equipment on a : at the beginning of the year a firm leased equipment on a capital lease capitalizing 60000 in its lease receivable

Assume the partners do wish to record goodwill and no : lion and tiger had operated as a partnership for a number of years. at june 30 20xx their balance sheet appeared as

You promshyise to adjust their pay as requested once the : you are the manager of a large flower shop. your employer james pays you a salary of 100000 per year to manage the

In 2011 a company changed from the lifo method of : in 2011 a company changed from the lifo method of accounting for inventory to fifo. the companys 2010 and 2011

Coolit company installed a new air conditioning system in : coolit company installed a new air conditioning system in their main office on january 1 2008. the system cost 300000

Prepare a comparative balance sheet for 2008 and 2007 : balance sheet data for the dover hot tub company on december 31 the end of the fiscal year are shown at the top of the

User Account

All Pages