At April 30, partners’ capital balances in SCJ Company are: G. Cooper $52,000, C. Jones $54,000, and J. Simmonds $18,000. The income sharing ratios are 5 : 4 : 1, respectively. On May 1, the SCJR Company is formed by admitting J. Redfern to the firm as a partner.
Instructions
(a) Journalize the admission of Redfern under each of the following independent assumptions.
(1) Redfern purchases 50% of Simmonds’s ownership interest by paying Simmonds $16,000 in cash.
(2) Redfern purchases 331/3% of Jones’s ownership interest by paying Jones $15,000 in cash.
(3) Redfern invests $66,000 for a 30% ownership interest, and bonuses are given to the old partners.
(4) Redfern invests $46,000 for a 30% ownership interest, which includes a bonus to the new partner.
(b) Jones’s capital balance is $32,000 after admitting Redfern to the partnership by investment.
If Jones’s ownership interest is 20% of total partnership capital, what were (1) Redfern’s cash investment and (2) the bonus to the new partner?