Question
Robin,Cardinal, Jay are partners sharing profits and losses 30/30/40 respectively. Their capital balances are: Robin $175,000 Cardinal $300,000 Jay $275,000 total $750,000 The old and
Robin,Cardinal, Jay are partners sharing profits and losses 30/30/40 respectively. Their capital balances are:
Robin $175,000
Cardinal $300,000
Jay $275,000
total $750,000
The old and partners agree that the assets are undervalued by $100,000.
a. Record the adjustment to the books before the new partner is admitted.
b. Assume sparrow invests in the partnership $250,000 and partners agree thereafter to share profits and losses equally. Record the entry of Sparrow using the bonus method whereby Sparrow receives 20% interest in the firm.
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Sound Investing, Chapter 15 - Liability Tricks
Authors: Kate Mooney
2nd Edition
0071719377, 9780071719377
