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Problem 3 The capital accounts of the Low, Medium and High partnership at December 31, 2019, together with profit and loss sharing ratios are as
Problem 3
The capital accounts of the Low, Medium and High partnership at December 31, 2019, together with profit and loss sharing ratios are as follows:
Low (40%) 204,000
Medium (20%) 118,000
High (40%) 278,000
The partners agree to admit Very High into the partnership.
REQUIRED: Prepare the journal entry or entries to admit Very High into the partnership under each of the following independent assumptions.
- Low sells half of his interest and medium sells 40% of her interest to Very High for a total purchase price of $190,000 paid directly to Low and Medium.
- Very High invests $180,000 cash in the partnership for a 20% interest in capital and profits and the partnership assets are not revalued.
- Very High invests $180,000 cash in the partnership for a 20% interest in capital and profits and the partnership assets are revalued.
- Very High invests $200,000 cash in the partnership for a 30% interest in the capital and profits and partnership assets are revalued.
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