At April 30, partners’ capital balances in ZCF Company are: Zachary $30,000. Cross $16,000, and Flane $15,000. The income sharing ratios are 5 : 3 : 2, respectively. On May 1, the ZCFC Company is formed by admitting Chantho to the firm as a partner.
Instructions
(a) Journalize the admission of Chantho under each of the following independent assumptions.
(1) Chantho purchases 50% of Flane’s ownership interest by paying Flane $6,000 in cash.
(2) Chantho purchases 50% of Cross’s ownership interest by paying Cross $10,000 in cash.
(3) Chantho invests $29,000 cash in the partnership for a 40% ownership interest that includes a bonus to the new partner.
(4) Chantho invests $24,000 in the partnership for a 20% ownership interest, and bonuses are given to the old partners.
(b) Cross’s capital balance is $24,000 after admitting Chantho to the partnership by investment. If Cross’s ownership interest is 24% of total partnership capital, what were (1) Chantho’s cash investment and (2) the total bonus to the old partners?