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Beth Steph and Linda have been operating a small gift shop for several years After an extensive review of their past operating performance the partners concluded that the business needed to expand

Beth, Steph, and Linda have been operating a small gift shop for several years. After an extensive review of their past operating performance, the partners concluded that the business needed to expand in order to provide an adequate return to the partners. The following balance sheet is for the partnership prior to the admission of a new partner, Mary. Cash.......... $160,000 Other Assets....... 640,000 ............. $800,000 Liabilities.......... $200,000 Beth, Capital (40%)..... 265,000 Steph, Capital (40%).... 215,000 Linda, Capital (20%)..... 120,000 .............. $800,000 Figures shown parenthetically reflect agreed profit-and-loss sharing percentages. Required: Prepare the necessary journal entries to record the admission of Mary in each of the following independent situations. Some situations may be recorded in more than one way. 1. Mary is to invest sufficient cash to receive a one-sixth capital interest. The parties agree that the admission is to be recorded without recognizing goodwill or bonus. 2. Mary is to invest $160,000 for a one-fifth capital interest. 3. Mary is to invest $160,000 for a one-fourth capital interest. 4. Mary is to invest $160,000 for a 40% capitalinterest.

Jul 09 2020 View more View Less

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