Question
The Prince-Robbins partnership has the following capital account balances on January 1, 2015: Prince, Capital $ 125,000 Robbins, Capital 115,000 Prince is allocated 70 percent
The Prince-Robbins partnership has the following capital account balances on January 1, 2015: |
Prince, Capital | $ | 125,000 |
Robbins, Capital | 115,000 | |
Prince is allocated 70 percent of all profits and losses with the remaining 30 percent assigned to Robbins after interest of 6 percent is given to each partner based on beginning capital balances. |
On January 2, 2015, Jeffrey invests $70,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the goodwill method. After this transaction, 6 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 $20,000.
1. What is the journal entry for goodwill?? goodwill?? robbins capital?? prince capital ?? 2. determine the allocation of income at the end of 2015 prince? robbins? jeffrey? |
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