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What entries would be made in recording the investment

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Question - Mason and Norris are partners who have capitals of P 6,000 and P4,800 and who share profits in the ratio of 3:2. Oster is admitted as a partner upon investing cash of P5,000, with profits to be shared equally.

Required -

1. Assume that Oster is allowed a 25% interest in the firm.

A. What entries would be made in recording the investment if the asset revaluation method is used? Use Other Assets account.

B. What entries would be made if the bonus method is used? Which method will be preferred by Oster?

C. How much will Oster gain by the use of that preferred method?

2. Assume that Oster is allowed a 40% interest in the firm.

A. What entries would be made in recording the investment if the asset revaluation method is used? Use Other Assets account.

B. What entries would be made if the bonus method is used?

C. Which method will be preferred by Oster? How much will Oster gain by the use of this method?

Reference no: EM132938658

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