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Question textChange of partnersAssume that Partners A and B each report a Capital Account of $525,000. Partner A wants to retire and sell her partnership interest to Partner C for $700,000. Partner B agrees to the sale and admission of Partner C into the partnership at an equal ownership percentage. Record the journal entry on the books of the partnership to reflect the admission of Partner C using both the Bonus Method and the Goodwill Method. Bonus Method: [table] General Journal Description | Debit | Credit Answer 1GoodwillPartner A, CapitalPartner B, CapitalPartner C, CapitalCorrectMark 1.00 out of 1.00 | Answer 2CorrectMark 1.00 out of 1.00 | Answer 3CorrectMark 1.00 out of 1.00 Answer 4GoodwillPartner A, CapitalPartner B, CapitalPartner C, CapitalCorrectMark 1.00 out of 1.00 | Answer 5CorrectMark 1.00 out of 1.00 | Answer 6CorrectMark 1.00 out of 1.00 [/table] Goodwill Method: [table] General Journal Description | Debit | Credit Answer 7GoodwillPartner A, CapitalPartner B, CapitalPartner C, CapitalCorrectMark 1.00 out of 1.00 | Answer 8CorrectMark 1.00 out of 1.00 | Answer 9CorrectMark 1.00 out of 1.00 Answer 10GoodwillPartner A, CapitalPartner B, CapitalPartner C, CapitalCorrectMark 1.00 out of 1.00 | Answer 11CorrectMark 1.00 out of 1.00 | Answer 12CorrectMark 1.00 out of 1.00 Partner B, Capital | Answer 13CorrectMark 1.00 out of 1.00 | Answer 14CorrectMark 1.00 out of 1.00 To record implied Goodwill. | | Answer 15GoodwillPartner A, CapitalPartner B, CapitalPartner C, CapitalCorrectMark 1.00 out of 1.00 | Answer 16CorrectMark 1.00 out of 1.00 | Answer 17CorrectMark 1.00 out of 1.00 Answer 18GoodwillPartner A, CapitalPartner B, CapitalPartner C, CapitalCorrectMark 1.00 out of 1.00 | Answer 19CorrectMark 1.00 out of 1.00 | Answer 20CorrectMark 1.00 out of 1.00 [/table]
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The problem presents a partnership admission scenario where Partner A retires by selling to Partner C for 700,000, with Partner B agreeing to admit Partner C on equal ownership. You are asked to reflect the journal entries under two methods: Bonus Method and Goodwill Method, and the provided answer array lists a sequence of numeric values intended to fill multiple blanks across two tables. Because the prompt is a fill-in with many blanks and not a standard single-best-choice question, we will walk through the core logic for each method and explain what kinds of journal entries and amounts you should expect to appear in the blanks. This will help you determine whether the numbers in the given answer set align with the correct accounting treatment.
- General principle to keep in mind for both methods:
- The total capital in the firm after admission equals the sum of the old partners’ capital accounts plus any entries recorded to reflect the new partner’s contribution, the retirement of the old partner, and any goodwill or bonus allocations that arise under the chosen method.
- In a two-step partnership change where one partner retires and a new partner is admitted with an equal ownership share, you typically compare the consideration (the amount the new partner pays) to the retiring partner’s capital balance and determine whether a bon......Login to view full explanationLog in for full answers
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If A and B form a partnership and each partner contributes $100,000 cash , the entry will be recorded with Debit [ Select ] A and B Capital Account A Capital and B Capital Retained Earnings Cash Partnership Investment and Credit [ Select ] Partnership Account Capital Investment A Capital and B Capital Cash .
Question textPrepare statement of partners capital Assume that there are three partners in a partnership, A, B, and C. Partners A and B each began the year with a capital account of $200,000. Partner C was admitted to the partnership during the year with a capital contribution of $120,000. The Partnership Agreement provides for a salary to Partner C of $20,000 and interest on the respective Capital Accounts of $10,000/$10,000/$4,500, respectively. During the year, the partners withdrew $8,000/$8,000/$4,000 and the allocation of profit was $46,200/$46,200/$23,100, respectively. Prepare the Statement of Partners’ Capital for the year.Use a negative sign with your answers to indicate a reduction to a balance. [table] | A | B | C | Total Statement of Partners' Capital: Capital account, beginning of year | Answer 1CorrectThe correct answer is: 200000Mark 1.00 out of 1.00 | Answer 2CorrectThe correct answer is: 200000Mark 1.00 out of 1.00 | Answer 3CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Answer 4CorrectThe correct answer is: 400000Mark 1.00 out of 1.00 Capital contributions | Answer 5CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Answer 6CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Answer 7CorrectThe correct answer is: 120000Mark 1.00 out of 1.00 | Answer 8CorrectThe correct answer is: 120000Mark 1.00 out of 1.00 Withdrawals | Answer 9CorrectThe correct answer is: -8000Mark 1.00 out of 1.00 | Answer 10CorrectThe correct answer is: -8000Mark 1.00 out of 1.00 | Answer 11CorrectThe correct answer is: -4000Mark 1.00 out of 1.00 | Answer 12CorrectThe correct answer is: -20000Mark 1.00 out of 1.00 Salary | Answer 13CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Answer 14CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Answer 15CorrectThe correct answer is: 20000Mark 1.00 out of 1.00 | Answer 16CorrectThe correct answer is: 20000Mark 1.00 out of 1.00 Interest | Answer 17CorrectThe correct answer is: 10000Mark 1.00 out of 1.00 | Answer 18CorrectThe correct answer is: 10000Mark 1.00 out of 1.00 | Answer 19CorrectThe correct answer is: 4500Mark 1.00 out of 1.00 | Answer 20CorrectThe correct answer is: 24500Mark 1.00 out of 1.00 Allocation of remaining profit | Answer 21CorrectThe correct answer is: 46200Mark 1.00 out of 1.00 | Answer 22CorrectThe correct answer is: 46200Mark 1.00 out of 1.00 | Answer 23CorrectThe correct answer is: 23100Mark 1.00 out of 1.00 | Answer 24CorrectThe correct answer is: 115500Mark 1.00 out of 1.00 | Answer 25CorrectThe correct answer is: 248200Mark 1.00 out of 1.00 | Answer 26CorrectThe correct answer is: 248200Mark 1.00 out of 1.00 | Answer 27CorrectThe correct answer is: 163600Mark 1.00 out of 1.00 | Answer 28CorrectThe correct answer is: 660000Mark 1.00 out of 1.00 [/table]
Question textFormation of partnership Assume that two individuals agree to form a partnership. Partner A is contributing an operating business that reports the following balance sheet: [table] Cash | $5,000 | | Accounts payable | $15,000 Receivables | 10,000 | | Accrued liabilities | 10,000 Inventories | 20,000 | | Total liabilities | $25,000 Total assets | $35,000 | | Net assets | $10,000 [/table] Partner B is contributing cash of $25,000. The partners agree that the initial capital of the partnership should be shared equally. Prepare the journal entry to record the capital contributions of the partners using both the Bonus Method and the Goodwill Method. [table] Description | Debit | Credit Bonus Method: | Cash | Answer 1CorrectThe correct answer is: 30000Mark 1.00 out of 1.00 | Answer 2CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Receivables | Answer 3CorrectThe correct answer is: 10000Mark 1.00 out of 1.00 | Answer 4CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Answer 5CashReceivablesInventoriesGoodwillAccounts payableAccrued liabilitiesPartner A CapitalPartner B CapitalCorrectThe correct answer is: InventoriesMark 1.00 out of 1.00 | Answer 6CorrectThe correct answer is: 20000Mark 1.00 out of 1.00 | Answer 7CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Accounts payable | Answer 8CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Answer 9CorrectThe correct answer is: 15000Mark 1.00 out of 1.00 | Accrued liabilities | Answer 10CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Answer 11CorrectThe correct answer is: 10000Mark 1.00 out of 1.00 | Answer 12CashReceivablesInventoriesGoodwillAccounts payableAccrued liabilitiesPartner A CapitalPartner B CapitalCorrectThe correct answer is: Partner A CapitalMark 1.00 out of 1.00 | Answer 13CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Answer 14CorrectThe correct answer is: 17500Mark 1.00 out of 1.00 | Partner B Capital | Answer 15CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Answer 16CorrectThe correct answer is: 17500Mark 1.00 out of 1.00 Goodwill Method: | Cash | Answer 17CorrectThe correct answer is: 30000Mark 1.00 out of 1.00 | Answer 18CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Receivables | Answer 19CorrectThe correct answer is: 10000Mark 1.00 out of 1.00 | Answer 20CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Inventories | Answer 21CorrectThe correct answer is: 20000Mark 1.00 out of 1.00 | Answer 22CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Answer 23CashReceivablesInventoriesGoodwillAccounts payableAccrued liabilitiesPartner A CapitalPartner B CapitalCorrectThe correct answer is: GoodwillMark 1.00 out of 1.00 | Answer 24CorrectThe correct answer is: 15000Mark 1.00 out of 1.00 | Answer 25CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Accounts payable | Answer 26CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Answer 27CorrectThe correct answer is: 15000Mark 1.00 out of 1.00 | Accrued liabilities | Answer 28CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Answer 29CorrectThe correct answer is: 10000Mark 1.00 out of 1.00 | Partner A Capital | Answer 30CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Answer 31CorrectThe correct answer is: 25000Mark 1.00 out of 1.00 | Answer 32CashReceivablesInventoriesGoodwillAccounts payableAccrued liabilitiesPartner A CapitalPartner B CapitalCorrectThe correct answer is: Partner B CapitalMark 1.00 out of 1.00 | Answer 33CorrectThe correct answer is: 0Mark 1.00 out of 1.00 | Answer 34CorrectThe correct answer is: 25000Mark 1.00 out of 1.00 [/table]
Question textPrepare statement of partners capital Assume that there are three partners in a partnership, A, B, and C. Partners A and B each began the year with a capital account of $200,000. Partner C was admitted to the partnership during the year with a capital contribution of $120,000. The Partnership Agreement provides for a salary to Partner C of $20,000 and interest on the respective Capital Accounts of $10,000/$10,000/$4,500, respectively. During the year, the partners withdrew $8,000/$8,000/$4,000 and the allocation of profit was $46,200/$46,200/$23,100, respectively. Prepare the Statement of Partners’ Capital for the year.Use a negative sign with your answers to indicate a reduction to a balance. [table] | A | B | C | Total Statement of Partners' Capital: Capital account, beginning of year | Answer 1CorrectMark 1.00 out of 1.00 | Answer 2CorrectMark 1.00 out of 1.00 | Answer 3CorrectMark 1.00 out of 1.00 | Answer 4CorrectMark 1.00 out of 1.00 Capital contributions | Answer 5CorrectMark 1.00 out of 1.00 | Answer 6CorrectMark 1.00 out of 1.00 | Answer 7CorrectMark 1.00 out of 1.00 | Answer 8CorrectMark 1.00 out of 1.00 Withdrawals | Answer 9CorrectMark 1.00 out of 1.00 | Answer 10CorrectMark 1.00 out of 1.00 | Answer 11CorrectMark 1.00 out of 1.00 | Answer 12CorrectMark 1.00 out of 1.00 Salary | Answer 13CorrectMark 1.00 out of 1.00 | Answer 14CorrectMark 1.00 out of 1.00 | Answer 15CorrectMark 1.00 out of 1.00 | Answer 16CorrectMark 1.00 out of 1.00 Interest | Answer 17CorrectMark 1.00 out of 1.00 | Answer 18CorrectMark 1.00 out of 1.00 | Answer 19CorrectMark 1.00 out of 1.00 | Answer 20CorrectMark 1.00 out of 1.00 Allocation of remaining profit | Answer 21CorrectMark 1.00 out of 1.00 | Answer 22CorrectMark 1.00 out of 1.00 | Answer 23CorrectMark 1.00 out of 1.00 | Answer 24CorrectMark 1.00 out of 1.00 | Answer 25CorrectMark 1.00 out of 1.00 | Answer 26CorrectMark 1.00 out of 1.00 | Answer 27CorrectMark 1.00 out of 1.00 | Answer 28CorrectMark 1.00 out of 1.00 [/table]
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