Reference no: EM132624336
Question - ABCD Limited, a partnership, has the following balance sheet at January 1, 20X0, prior to the admission of a new partner, Eden.
Cash and current assets $39,000
Liabilities $52,000
Land 234,000
Adams, capital 26,000
Building and equipment 130,000
Barnes, capital 52,000
Cordas, capital 117,000
Davis, capital 156,000
Total assets $403,000
Total liabilities and capital $403,000
Eden acquired a 20% interest in the partnership by contributing a total of $71,500 directly to the other four partners. Goodwill is to be recorded. Profits and losses have previously been split according to the following percentages: Adams, 15%; Barnes, 35%; Cordas, 30%; and Davis, 20%.
Required -
(A) Prepare the journal entries necessary to record goodwill.
(B) After goodwill has been recorded, what are the individual capital balances of the original partners?
(C) Prepare the journal entry necessary to allocate original partners' balances to Eden.
(D) After all journal entries have been recorded, what are the individual capital balances?
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