Prepare the partnership records goodwill

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Reference no: EM132746496

Question: A and B share partnership profits 70%, 30%, respectively. The partners agree to admit C into the partnership for a 40% interest in capital and earnings.

Capital accounts immediately before admission of C are:

A (70%) 200,000

B (30%) 200,000

Total 400,000

Prepare the journal entry(s) for the admission of C to the partnership assuming C invested $250,000 for the ownership interest.

C paid the money to the partnership for a 40% interest.

1. The partnership records goodwill.

2. The partnership uses the bonus method instead of goodwill.

Reference no: EM132746496

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