After the partnership has been operating for a year the Capi

After the partnership has been operating for a year, the Capital accounts of Bob and Kim are $15,000 and $10,000, respectively. Sonia buys a one-fourth interest in the partnership by investing cash of $5,000. What will be the Capital account balances of the partners in the new Bob, Kim, and Sonia partnership, assuming that the new partner receives a bonus and that Bob and Kim share income and losses equally? Prepare the entry in journal form to record the transfer of ownership on the partnership books.

Solution

Inclusion of new partner--

Bob capital account = $15,000

Kim capital account = $10,000

Sonia\'s invest =$ 5,000

Total capital invested = $30,000

Sonia\'s interest (1/4th) = 25% of 30,000=$7500

Book value acquired = $6,000

so, the journal inclusion for the admission of the partner will be (here the bonus is for new partner)--