Horngren’s Accounting, Volume 2, 11th Canadian Edition by Tracie Miller-Nobles Solution manual

Partnership capital after Ratta is admitted                 $120,000
                                                                                                 
Ratta’s capital in the partnership ($120,000 ´ 1/4)   $  30,000
 
 

                                                                            (continued) P12-4A
c
General Journal
DateAccount Titles and ExplanationsPost. Ref.DebitCredit
Jul.31Cash 30,000 
       Bharat Ratta, Capital  20,000
       Eleanor Craven, Capital  2,000
       Navneet Shelmar, Capital  3,000
       Brian Harmon, Capital  5,000
  To admit Ratta as a partner with a one-sixth interest in the business.   
 
Partnership capital before Ratta is admitted ($20,000 + $30,000 + $40,000)                                                      $90,000
Ratta’s investment in the partnership                            30,000
Partnership capital after Ratta is admitted                 $120,000
                                                                                                 
Ratta’s capital in the partnership ($120,000 ´ 1/6)   $  20,000
 
Bonus to other partners: $30,000 – $20,000 = $10,000
Then allocate based on 20% for Craven ($2,000), 30% for Shelmar ($3,000), and 50% for Harmon ($5,000).
 
a.                                                                      (20–25 min.) P12-5A
General Journal
Date
2020Account Titles and ExplanationsPost. Ref.DebitCredit
Dec.31Karen Tenne, Capital 248,000 
       Michael Adams, Capital  248,000
  To record transfer of Tenne’s equity in the partnership to Adams.   
 
b.
General Journal
Date
2020Account Titles and ExplanationsPost. Ref.DebitCredit
Dec.31Karen Tenne, Capital 248,000 
       Cash  72,000
       Note Payable to Karen Tenne  176,000
  To record withdrawal of Tenne from the partnership.   
 
c.                                                                         (continued) P12-5A