The Distance Plus partnership has the following capital balances at the beginning of the current year:
|
Tiger (50% of profits and losses) |
85,000 |
|
Phil (30%) |
60,000 |
|
Ernie (20%) |
55,000 |
|
200,000 |
Each of the following questions ashould be viewed independently.
a. If Sergio invest $100,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the bonus method is used.
b. If Sergio invests $60,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the bonus method is used.
c. If Sergio invests $72,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the goodwill method is used.