Prepare the journal entry to record hal entrance

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Question - The C-P partnership has the following capital account balances on January 1, 2013:

Com, Capital $150,000

Pack, Capital 110,000

Com is allocated 60 percent of all profits and losses with the remaining 40 percent assigned to Pack after interest of 10 percent is given to each partner based on beginning capital balances.

On January 2, 2013, Hal invests $76,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the goodwill method. After this transaction, 10 percent interest is still to go to each partner. Profits and losses will then be split as follows: Com (50%), Pack (30%), and Hal (20%). In 2013, the partnership reports a net income of $36,000.

a. Prepare the journal entry to record Hal's entrance into the partnership on January 2, 2013.

b. Determine the allocation of income at the end of 2013.

Reference no: EM131877017

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