Reference no: EM13527513
Accounting for the admission of a new partner
Hitchcock, Michelson, and Jasper, a partnership, is considering admitting Ken Saunders as a new partner. On July 31 of the current year, the capital accounts of the three existing partners and their shares of profits and losses are as follows:
|
Capital
|
Profit-and-Loss %
|
|
Hitchcock
|
$33,000
|
20%
|
|
Michelson
|
66,000
|
25%
|
|
Jasper
|
99,000
|
55%
|
Requirements
Journalize the admission of Saunders as a partner on July 31 for each of the following independent situations:
1. Saunders pays Jasper $132,000 cash to purchase Jasper's interest.
2. Saunders invests $66,000 in the partnership, acquiring a 1/4 interest in the business.
3. Saunders invests $66,000 in the partnership, acquiring a 1/6 interest in the business.
4. Saunders invests $66,000 in the partnership, acquiring a 1/3 interest in the business.