Hylands is admitted to the partnership of Reddick Nole Prio

Hylands is admitted to the partnership of Reddick & Nole. Prior to her admission, the partnership books show Reddick\'s capital balance at S180,000 and Nole\'s at $90,000. Assume Reddick and Nole share profits and losses equally. Read the requirements. Requiremen 1. Compute each partner\'s equity on the books of the new partnership under the following plans: a. Hylands pays $100,000 for Nole\'s equity. Hylands pays Nole directly. Begin by computing the partner\'s equity base for plan a. Hylands pays $100,000 for Nole\'s equity. Hylands pays Nole directly. (Enter a share for each partner. Complete all answer boxes. For accounts with a So balance, make sure to enter \"O\" in the appropriate cell. Enter negative amounts with a parentheses or minus sign.) Plan A Partnership capital before admission of Hylands Effect on capital balance as a result of admission of Hylands Partnership capital after admission of Hylands Reddick Nole Hylands Requirements 1. Compute each partner\'s equity on the books of the new partnership under the following plans: a. Hylands pays $100,000 for Nole\'s equity. Hylands pays Nole directly. b. Hylands contributes $90,000 to acquire a 1/4 interest in the partnership. c. Hylands contributes $135,000 to acquire a 114 interest in the partnership 2. Journalize the entries for admitting the new partner under plans a, b, and c. Print Done Enter any number in the edit fields and then click Check Answer

Solution

Solution 1a:

Solution 1b:

Ratio of profit between Reddick and Nole = 1:1

Total capital after new capital introduced Hylands = $270,000 + $90,000 = $360,000

Hylands share in Partnership = 25%

Therefore required share of capital by Hylands = 360000 * 25% = $90,000

Bonus capital = $90,000 - $90,000 = 0

Solution 1c:

Ratio of profit between Reddick and Nole = 1:1

Total capital after new capital introduced Hylands = $270,000 + $135,000 = $405,000

Hylands share in Partnership = 25%

Therefore required share of capital by Hylands = $405,000 * 25% = $101,250

Bonus capital contributed by Hylands = $135,000 - $101,250 = $33,750

Bonus capital by hyland will be distributed between old partners in ratio of 1:1

Solution 2:

Computation of Partner\'s Equity in New Partnership
Plan A	Reddick	Nole	Hylands
Partnership capital before admission of Hylands	$180,000.00	$90,000.00	$0.00
Effect on capital balance as a result of admission of Hyland		-$90,000.00	$90,000.00
Partnership capital after admission of hylands	$180,000.00	$0.00	$90,000.00