At April 30, partners’ capital balances in PDL Company are: G. Donley $52,000, C. Lamar $48,000, and J. Pinkston $18,000. The income sharing ratios are 5:4:1, respectively. On May 1, the PDLT Company is formed by admitting J. Terrell to the firm as a partner.
Instructions
(a)Journalize the admission of Terrell under each of the following independent assumptions.
(1)Terrell purchases 50% of Pinkston”s ownership interest by paying Pinkston $16,000 in cash.
(2)Terrell purchases 33?% of Lamar”s ownership interest by paying Lamar $15,000 in cash.
(3)Terrell invests $62,000 for a 30% ownership interest, and bonuses are given to the old partners.
(4)Terrell invests $42,000 for a 30% ownership interest, which includes a bonus to the new partner.
(b)Lamar”s capital balance is $32,000 after admitting Terrell to the partnership by investment. If Lamar”s ownership interest is 20% of total partnership capital, what were (1) Terrell”s cash investment and (2) the bonus to the new partner?