The AT Partnership was organized several years ago, and on January 1, 2016, the partners agree to

Question:

The AT was organized several years ago, and on January 1, 2016, the partners agree to admit Car for a 40 percent interest in capital and earnings. Capital account balances and profit- and loss-sharing ratios at January 1, 2016, before the admission of Car, are as follows:
Aid (50%) ........... $500,000
Tha (50%) ......... 280,000
REQUIRED:
Prepare journal entries to record the admission of Car for a 40 percent interest in the capital and rights to future profits under the following independent assumptions.
1. Car pays $450,000 directly to Aid and Tha for 40 percent of each of their interests, and the bonus procedure is used.
2. Car pays $600,000 directly to Aid and Tha for 40 percent of each of their interests, and is recorded.
3. Car invests $450,000 in the for her 40 percent interest, and is recorded.
4. Car invests $600,000 in the for her 40 percent interest, and is recorded.
Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...