Exercise 15-7 Phil Phoenix and Tim Tucson are partners in an electrical repair business. Their respective capital balances are $92,800 and $51,300, and they share profits and losses equally. Because the partners are confronted with personal financial problems, they decided to admit a new partner to the partnership. After an extensive interviewing process they elect to admit Don Dallas into the partnership. Prepare the journal entry to record the admission of Don Dallas into the partnership under each of the following conditions: 1. 2. 3. 4. Don acquires one-fourth of Phil's capital interest by paying $30,800 directly to him. Don acquires one-fifth of each of Phil's and Tim's capital interests. Phil receives $25,100 and Tim receives $14,700 directly from Don. Don acquires a one-fifth capital interest for a $61,600 cash investment in the partnership. Total capital after the admission is to be $205,700. Don invests $41,140 for a one-fifth interest in partnership capital. Implicit goodwill is to be recorded. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Debit Credit No. Account Titles and Explanation 1. 3. (To record implicit goodwill) (To record investment by Don) Accounts Payable Accounts Receivable Accrued Expenses Accrued Liabilities Advances from Customers Allen, Capital Allowance for Depreciation of Buildings Allowance for Depreciation of Equipment Allowance for Doubtful Accounts Allowance for Future Inventory Losses Andrews, Capital Back, Capital Bad Debt Expense Bennet, Capital Beth, Capital Bill, Capital Brian, Capital Brown, Capital Buildings Cain, Capital Cash Coss, Capital Cox, Capital Dallas, Capital Dave, Capital Down, Capital Equipment Folkert, Capital Forth, Capital Gallo, Capital Goodwill Hamm, Capital Income Summary Insurance Expense Interest Expense Interest Payable Inventory Investments Jane, Capital Jeff, Capital John, Capital Julie, Capital Julie, Drawing Kazma, Capital Land Linda, Capital Mary, Capital Matt, Capital Meyers, Capital Mike, Capital Moore, Capital Mortgage Payable Nancy, Capital No Entry Notes Payable Operating Expenses Other Current Liabilities Paul, Capital Phoenix, Capital Prepaid Expenses Prepaid Insurance Snow, Capital Snow, Capital Steph, Capital Supplies Tom, Capital Tom, Drawing Tucker, Capital Tucson, Capital Unrealized Gain on Revaluation of Building Unrealized Gain on Revaluation of Inventory Unrealized Gain on Revaluation of Land Unrealized Loss on Revaluation of Building Unrealized Loss on Revaluation of Inventory Unrealized Loss on Revaluation of Land
