Topic: Admission of New Partner—Goodwill Method
10.Assume that the partnership’s balance sheet reflects Partner Capital of $1,200,000 and $1,800,000, respectively, for Partner A and Partner B immediately prior to the admission of Partner C. Partner C is contributing $2,400,000 for a one-third ownership interest.
Required:Prepare the journal entry to admit Partner C using the Goodwill Method.Assume that the partners agree to share profits equally.
Topic: Allocation of Profit to Partners
11. Assume that there are three partners in a partnership, A, B, and C. Partner C provides services to the partnership and is entitled to a salary of $360,000. Assume that the partnership revenues, less expenses (other than salary to Partner C), amount is $1,800,000. Finally, assume that the Partnership Agreement provides for a sharing ratio of 40%/40%/20% for Partners A, B, and C, respectively.
Required:Prepare a schedule for the allocation of profit to the partners.