Asked by Jessica Sheppard on Jul 13, 2024
Verified
Kala and Leah, partners in Best Designs, have capital balances of $40,000 and $60,000, respectively. Adam joins the partnership by buying one-half of Kala's interest for $30,000. In addition, because of Adam's outstanding sales skills, the partners agree to increase his interest to 40% if he invests another $10,000. The income-sharing ratio of Kala, Leah, and Adam is 4:3:1.
(a)Journalize the entries to record the admission of Adam to the partnership.
(b)Immediately after Adam's admission to the partnership, Leah sells one-fourth of her interest to Denton for $35,000. Journalize the entry to record this transaction.
Income-Sharing Ratio
The ratio used by partnerships to distribute profits and losses among partners according to their agreement.
Outstanding Sales Skills
Outstanding sales skills are exceptional abilities in selling, characterized by techniques and qualities that significantly enhance the potential to convert prospects into actual customers.
- Implement entry techniques for the acceptance of a new partner into a collaborative partnership.
- Evaluate how changes in partnership composition affect capital balances and ownership interests.
Verified Answer
MN
Learning Objectives
- Implement entry techniques for the acceptance of a new partner into a collaborative partnership.
- Evaluate how changes in partnership composition affect capital balances and ownership interests.
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