Problem 4

The Balance Sheet of the XY partnership on December 31, 2018, appears below.

X and Y share profits and losses in the ratio 60:40. Each of the following questions is independent of the others.

Prepare journal entries for each of the following:

Use bonus method where appropriate and show all computations.

a) Refer to the above information. Assume that Z purchases a one-fourth proportionate total capital interest directly from Y for a total of $60,000.

b) Refer to the above information. Assume Z invests $60,000 cash into the XY partnership for a one-fourth interest in partnership capital and profits.

1. Refer to the above information. Assume that Z invests $80,000 cash into the XY partnership for a one-fifth interest in partnership capital and profits.
2. Refer to the above information. Assume that Z invests $50,000 cash into the XY partnership for a one fifth interest in partnership capital and profits.

Cash Other Assets $ 60,000 Liabilities 200,000 X, Capital Y, Capital $260.000 Total Liabilities and Capital $ 60,000 90,000 110.000 $260.000 Total Assets