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On October 1, 2020, the partner's capital balances and the profit and loss sharing ratio for Mandalorian Enterprises were as follows: CAPITAL PROFIT & PARTNER
| On October 1, 2020, the partner's capital balances and the profit and loss | |||||
| sharing ratio for Mandalorian Enterprises were as follows: | |||||
| CAPITAL | PROFIT & | ||||
| PARTNER | BALANCES | LOSS RATIO | |||
| Alex | $96,000 | 1 | |||
| John | $26,000 | 2 | |||
| Travis | $134,000 | 5 | |||
| Use the above information to answer Parts A and B below. Each of | |||||
| these parts is independent from the other part. | |||||
| PART A | |||||
| On October 1, 2020 Travis convinces his partners to admit his young child | |||||
| Grogu into the partnership. | |||||
| (I) Prepare the journal entry to admit Mike into the partnership if Mike | |||||
| uses personal funds and pays the partnership $75,000 for a 25% ownership. | |||||
| (II) Prepare the journal entry to admit Mike if instead Mike pays $140,000 | |||||
| directly to John for half of Johns ownership interest. | |||||
| PART B | |||||
| Assume instead that on October 1, 2020 Alex decides to withdraw from | |||||
| the partnership. | |||||
| (I) Journalize the withdrawal of Alex if the partnership pays Alex | |||||
| $56,000 cash. | |||||
| (II) Journalize the withdrawal of Alex if the two remaining partners (John and | |||||
| travis) use personal funds to buy Alex ownership interest. Assume they | |||||
| each pay Alex $80,000 for half of Alex interest in the partnership. | |||||
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