In the GMP partnership (to which Elan seeks admittance), the capital balances of Mary, Gene, and Pat,

Question:

In the GMP (to which Elan seeks admittance), the capital balances of Mary, Gene, and Pat, who share income in the ratio of 6:3:1, are
Mary ........ $240,000
Gene ......... 120,000
Pat ......... 40,000
Required
a. If no or bonus is recorded, how much must Elan invest for a one-third interest?
b. Prepare journal entries for the admission of Elan if she invests $80,000 for a 20 percent interest and is recorded.
c. Prepare journal entries for the admission of Elan if she invests $200,000 for a 20 percent interest. Total capital will be $600,000; the partners use the bonus method.
d. Elan is concerned that she may be held liable for the liabilities existing on the day she is admitted to the GMP She found nothing in the agreement on this item. What does the UPA 1997 state with regard to the liability of a new partner for obligations incurred prior to admission?

Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...