Meir, Benson, and Lau are partners and share income and loss in a 1:4:5 ratio. T
ID: 2550560 • Letter: M
Question
Meir, Benson, and Lau are partners and share income and loss in a 1:4:5 ratio. The partnership's capital balances are as follows: Meir, $38,000; Benson, $159,000; and Lau, $203,000. Benson decides to withdraw from the partnership, and the partners agree not to have the assets revalued upon Benson's retirement. Assume that Benson does not retire from the partnership described in Part 1. Instead, Rhode is admitted to the partnership on February 1 with a 25% equity. Prepare journal entries to record Rhode’s entry into the partnership under each of the following separate assumptions: Rhode invests (a) $133,333; (b) $97,333; and (c) $174,666. (Do not round your intermediate calculations.)
Explanation / Answer
Req S.no. Accounts title and explanations Debit $ Credit $ case a. Cash Account dr. 133,333 Rhode's capital 133,333 Note: Capital before addmission (38000+159000+203000) 400000 Add: Rhode capital 133333 Total capital 533,333 Rhode's share of capital 133333.3 No Bonus S.no. Accounts title and explanations Debit $ Credit $ case b. Cash Account dr. 97,333 Meir Capital Dr. 2700 Benson Capital Dr. 10800 lau capital Dr. 13500 Rhode' capital 124333 Note: Capital before addmission (38000+159000+203000) 400000 Add: Rhode capital 97333 Total capital 497,333 Rhode's share of capital 124333 Bonus to Rhode 27000 S.no. Accounts title and explanations Debit $ Credit $ case c. Cash Account dr. 174,666 Rhode's capital 143,666 Meir capital 3,100 Benson Capital 12,400 Lau capital 16,500 Note: Capital before addmission (38000+159000+203000) 400000 Add: Rhode capital 174666 Total capital 574,666 Rhode's share of capital 143666 Bonus to other partners 31000