Anybody out there who can help enlighten me with the following problem PLEASE don't hesitate :) TIA..
The Struter Partnership has total partners' equity of $510,000, which is made up of Main, Capital, $400,000, and Frist, Capital, $110,000. Ther partners share net income and loss in a ratio of 80% to Main and 20% to Frist. On November 1, Madison is admitted to the partnership and given a 15% interest in equity and 15% share in any income and loss. Prepare the journal entry to record the admission of Madison under each of the following separate assumptions: Madison invests cash of (1) $90,000; (2) $120,000; and (3) $80,000.
enter the following transaction in the journal of aram and prepar ledger accounts also balance the ledger accounts and draw a trial balance as on 30th april 2015
1. He started business with cash $10000
2. Deposited in to bank(salam) $5000
3. Bought goods from zara co for cash $4000
4.aram had taken goods worth $200
5. He sold goods to lara on account $2000
6. He purchased motor car for $2000 by cheque
7.received cash from lara $1000
8. He bought stationery on credit from M.Dara $200
9. He sold goods to Dler by cheque $1000
10. He paid salaries for the month of April $500 cash
To solve this problem, first, let's analyze the given information. The Struter Partnership has total partners' equity of $510,000, which is made up of Main, Capital, $400,000, and Frist, Capital, $110,000. The partners share net income and loss in a ratio of 80% to Main and 20% to Frist.
Now, you need to prepare the journal entries to record the admission of Madison under three separate assumptions: Madison invests cash of (1) $90,000; (2) $120,000; and (3) $80,000.
Here's how you can calculate each scenario:
1) Madison invests cash of $90,000:
Madison's interest in equity = $90,000 (15% of the total partners' equity)
Madison's share in income and loss = 15%
Madison's portion of equity = $90,000
Main's portion of equity = $400,000 * 80% = $320,000
Frist's portion of equity = $110,000 * 20% = $22,000
Journal entry:
Debit: Cash (Madison's investment) - $90,000
Credit: Madison, Capital - $90,000
[This records Madison's cash investment]
2) Madison invests cash of $120,000:
Madison's interest in equity = $120,000 (15% of the total partners' equity)
Madison's share in income and loss = 15%
Madison's portion of equity = $120,000
Main's portion of equity = $400,000 * 80% = $320,000
Frist's portion of equity = $110,000 * 20% = $22,000
Journal entry:
Debit: Cash (Madison's investment) - $120,000
Credit: Madison, Capital - $120,000
[This records Madison's cash investment]
3) Madison invests cash of $80,000:
Madison's interest in equity = $80,000 (15% of the total partners' equity)
Madison's share in income and loss = 15%
Madison's portion of equity = $80,000
Main's portion of equity = $400,000 * 80% = $320,000
Frist's portion of equity = $110,000 * 20% = $22,000
Journal entry:
Debit: Cash (Madison's investment) - $80,000
Credit: Madison, Capital - $80,000
[This records Madison's cash investment]
By following these calculations, you can prepare the necessary journal entries to record Madison's admission to the partnership under each of the given assumptions.