1

Todd is interested in investing in Charger partnership for a 30% interest; however, the current partners are concerned how the addition of new partner will impact their current partnership capital accounts. The capital balances at the beginning of the year are Chad (40%) $80,000; Adam (40%) $50,000; and Alex (20%) $65,000

Prepare the journal entry (in Word or Excel) for each of the following scenarios:

1. Todd invests $100,000 cash using the bonus method.
2. Todd invests $75,000 cash using the bonus method.
3. Todd invests $90,000 cash using the goodwill method.

Problem 2

ABCD Partnership has decided to dissolve the partnership. As part of dissolution, all the assets will be sold and existing liabilities paid in full.

Cash	65,000
Land	145,000
Building	120,000
Total	330,000

Liabilities	55,000
Partner A, Capital	81,500
Partner B, Capital	40,000
Partner C, Capital	62,000
Partner D, Capital	91,500
Total liabilities and capital	330,000

Using the information provided above, use Word or Excel to create journal entries that show how each of the following independent scenarios should be handled.

Scenario 1: The $10,000 cash that exceeds the partnership's liabilities is to be disbursed immediately. If profits and losses are allocated to Partner A, Partner B, Partner C, and Partner D on a 2:3:3:2 basis, respectively, how will the $10,000 be divided?

Scenario 2: The $10,000 cash that exceeds the partnership's liabilities is to be disbursed immediately. If profits and losses are allocated to Partner A, Partner B, Partner C, and Partner D on a 2:2:3:3 basis, respectively, how will the $10,000 be divided?

Scenario 3: The building is immediately sold for $80,000 to give total cash of $142,000. Following the sales, the liabilities are paid, leaving a cash balance of $90,000. This cash is to be distributed to the partners. How will the cash be divided if profits and losses are allocated to Partner A, Partner B, Partner C, and Partner D on a 1:3:3:3 basis, respectively?