Fred and Wilma, partners in a consulting business, share profits and losses in the ratio...
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Accounting
Fred and Wilma, partners in a consulting business, share profits and losses in the ratio of 2:3, respectively. Prior to recording the admission of Betty as a new partner, Fred has a capital balance of $60,000 and Wilma has a capital balance of $35,000.
Required: For each of the following independent situations, prepare the journal entry or entries that was made on the partnership=s books to record the admission of Betty. 1. Betty purchased a 32% ownership interest in the partnership, paying $30,000 directly to Fred and $30,000 directly to Wilma.
2. Betty invested $40,000 cash in the partnership for a 25% ownership interest. At that time, the fair value of the land of the partnership is $15,000 less than its book value. The goodwill/revaluation method is used. 3. Betty invested $45,000 cash in the partnership for a 52% ownership interest. The bonus method is used.
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