The Prince-Robbins partnership has the following capital account balances on January 1, 2015:

Prince, Capital $ 130,000

Robbins, Capital 120,000

Prince is allocated 80 percent of all profits and losses with the remaining 20 percent assigned to Robbins after interest of 7 percent is given to each partner based on beginning capital balances.

On January 2, 2015, Jeffrey invests $73,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the goodwill method. After this transaction, 7 percent interest is still to go to each partner. Profits and losses will then be split as follows: Prince (50%), Robbins (30%), and Jeffrey (20%). In 2015, the partnership reports a net income of $23,000.

a.
Prepare the journal entry to record Jeffrey entrance into the partnership on January 2, 2015. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Record the entry for goodwill allocation, during the admission of a new partner.

TRANSACTION GENERAL JOURNAL DEBIT CREDIT

Record the cash received from new partner

TRANSACTION GENERAL JOURANL DEBIT CREDIT

b.
Determine the allocation of income at the end of 2015.

INCOME ALLOCATION

PRINCE

ROBBINS

JEFFREY

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Jean KeelingLv2

28 Sep 2019

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OâDonnell is still entitled to (1) interest on his beginning capital balance as well as (2) the share of partnership income just specified.
Any remaining profit or loss will be split on a 6:4 basis between Reese and Dunn, respectively.

Partnership income for 2017 is reported as $68,000. Each partner withdraws the full amount that is allowed.

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On January 1, 2019, Postner withdraws from the business for personal reasons. The articles of partnership state that any partner may leave the partnership at any time and is entitled to receive cash in an amount equal to the recorded capital balance at that time plus 10 percent.

Prepare journal entries to record the preceding transactions on the assumption that the bonus (or no revaluation) method is used. Drawings need not be recorded, although the balances should be included in the closing entries.
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OâDonnell will be credited annually with interest equal to 20 percent of the beginning capital balance for the year.
OâDonnell will also have added to his capital account 20 percent of partnership income each year (without regard for the preceding interest figure) or $7,000, whichever is larger. All remaining income is credited to Reese.
Neither partner is allowed to withdraw funds from the partnership during 2016. Thereafter, each can draw $6,000 annually or 10 percent of the beginning capital balance for the year, whichever is larger.

OâDonnell is still entitled to (1) interest on his beginning capital balance as well as (2) the share of partnership income just specified.
Any remaining profit or loss will be split on a 6:4 basis between Reese and Dunn, respectively.

Partnership income for 2017 is reported as $68,000. Each partner withdraws the full amount that is allowed.

Prepare journal entries to record the preceding transactions on the assumption that the bonus (or no revaluation) method is used. Drawings need not be recorded, although the balances should be included in the closing entries.
Prepare journal entries to record the previous transactions on the assumption that the goodwill (or revaluation) method is used. Drawings need not be recorded, although the balances should be included in the closing entries.

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