Joey and Rachel Are Partners Whose Capital Balances Are $400,000

question 21

Essay

Joey and Rachel are partners whose capital balances are $400,000 and $300,000 and who share profits 3:2. Due to a shortage of cash, Joey and Rachel agree to admit Ross to the firm.
Required:
Prepare the journal entries required to record Ross's admission under each of the following assumptions:
(a) Ross invests $200,000 for a 1/4 interest. The total firm capital is to be $900,000.
(b) Ross invests $300,000 for a 1/4 interest. Goodwill is to be recorded.
(c) Ross invests $150,000 for a 1/5 interest. Goodwill is to be recorded.
(d) Ross purchases a 1/4 interest in the firm, with 1/4 of the capital of each old partner transferred to the account of the new partner. Ross pays the partners cash of $250,000, which they divide between themselves.

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Definitions:

Authoritative Parenting

A parenting style characterized by high responsiveness and high demands, where parents set clear standards, are assertive but not intrusive or restrictive.

Gender Awareness

The recognition and understanding of the differences between genders and the societal roles attributed to each gender, often developed in early childhood.

Power-assertive Methods

Power-assertive methods refer to disciplinary techniques that involve the use of authority or physical force to enforce child compliance, such as corporal punishment or strict control.

Egalitarian

A principle that emphasizes equality and equal rights across genders, races, and economic statuses.