Accounting for the admission of a new partner
Hitchcock, Michelson, and Jasper, a partnership, is considering admitting Ken Saunders as a new partner. On July 31 of the current year, the capital accounts of the three existing partners and their shares of profits and losses are as follows:
|
Capital |
Profit and Loss % |
|
|
Hitchcock |
$33,000 |
20% |
|
Michelson |
66,000 |
25% |
|
Jasper |
99,000 |
55% |
Requirements
Journalize the admission of Saunders as a partner on July 31 for each of the following independent situations:
1. Saunders pays Jasper $132,000 cash to purchase Jasper’s interest.
2. Saunders invests $66,000 in the partnership, acquiring a 1/4 interest in the business.
3. Saunders invests $66,000 in the partnership, acquiring a 1/6 interest in the business.
4. Saunders invests $66,000 in the partnership, acquiring a 1/3 interest in the business.