Paul and Ray Sell Musical Instruments Through Their Partnership

question 30

Essay

Paul and Ray sell musical instruments through their partnership.To bring in additional funds and expertise,they decide to admit Janet to the partnership.Paul's capital is $400,000,Ray's capital is $200,000,and they share income in a ratio of 7:3,respectively.
Required
Record Janet's admission for each of the following independent situations:
a)Janet invests $180,000 for a one-fourth interest.Goodwill is to be recorded.
b)Paul and Ray agree that some of the inventory is obsolete.The inventory account is decreased before Janet is admitted.Janet invests $190,000 for a one-fourth interest.

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Definitions:

Decentralised

A system where decision-making powers are distributed among various levels within an organization rather than being concentrated at a single point.

Extensive Delegation

The practice of assigning authority and responsibility widely within an organization to empower employees and improve decision-making processes.

Authority-and-Responsibility

Refers to the right to make decisions and the obligation to ensure tasks are completed as expected, often discussed in managerial and organizational contexts.

Supervisor

An individual in a position of authority who oversees the work of others, often directly managing employees.