Question
In the GMP partnership (to which Elan seeks admittance), the capital balances of Mary, Gene, and Pat, who share income in the ratio of 6:3:1,
In the GMP partnership (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 | $ | 249,600 |
|
Gene |
| 124,800 |
|
Pat |
| 41,600 |
|
Required: a. If no goodwill or bonus is recorded, how much must Elan invest for a one-third interest?
b. Prepare journal entry for the admission of Elan if she invests $80,600 for a 20 percent interest and goodwill is recorded.
c. Prepare journal entry for the admission of Elan if she invests $201,000 for a 20 percent interest. Total capital will be $617,000; the partners use the bonus method.
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