A and B share partnership profits 70%, 30%, respectively.

The partners agree to admit C into the partnership for a 40% interest in capital and earnings.

Capital accounts immediately before admission of C are:

A(70%)200,000

B (30%) 200,000

Total 400,000

Prepare the journal entry(s) for the admission of C to the partnership assuming C invested$250,000 for the ownership interest.

C paid the money to the partnership for a 40% interest.

1.The partnership records goodwill.

2.The partnership uses the bonus method instead of goodwill.