Problem 14-20 (LO 14-9)

The Prince-Robbins partnership has the following capital account balances on January 1, 2015

Prince, Capital	$	80,000
Robbins, Capital		70,000

Prince is allocated 70 percent of all profits and losses with the remaining 30 percent assigned to Robbins after interest of 7 percent is given to each partner based on beginning capital balances.

On January 2, 2015, Jeffrey invests $43,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the goodwill method. After this transaction, 7 percent interest is still to go to each partner. Profits and losses will then be split as follows: Prince (50%), Robbins (30%), and Jeffrey (20%). In 2015, the partnership reports a net income of $12,000.

a.	Prepare the journal entry to record Jeffrey entrance into the partnership on January 2, 2015.