Carter and Gore Are Partners in an Automobile Repair Business

question 12

Essay

Carter and Gore are partners in an automobile repair business. Their respective capital balances are $425,000 and $275,000, and they share profits in a 3:2 ratio. Because of growth in their repair business, they decide to admit a new partner. Bush is admitted to the partnership, after which Carter, Gore, and Bush agree to share profits in a 3:2:1 ratio.
Required:
Prepare the necessary journal entries to record the admission of Bush in each of the following independent situations:
A. Bush invests $300,000 for a one-fourth capital interest, but will not accept a capital balance of less than his investment.
B. Bush invests $150,000 for a one-fifth capital interest. The partners agree that assets and the firm as a whole should be revalued.
C. Bush purchases a 20% capital interest from each partner. Carter receives $100,000 and Gore receives $50,000 directly from Bush.

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Definitions:

Theory

A coherent group of propositions formulated to explain a group of facts or phenomena, often serving as the basis for further investigation.

Research

The systematic investigation into and study of materials, sources, etc., in order to establish facts and reach new conclusions.

Leadership

The act of guiding, directing, or influencing others towards a shared goal or objective.

Theory

A set of concepts designed to clarify something, rooted in universal principles that are not dependent on the subject matter in question.