the following information applies to the questions displayed below. meir, benson, and lau are partners and…

the following information applies to the questions displayed below. meir, benson, and lau are partners and share income and loss in a 2:3:5 ratio (in percents: meir, 20%; benson, 30%; and lau, 50%). the partnerships capital balances are as follows: meir, $48,000; benson, $74,000; and lau, $128,000. benson decides to withdraw from the partnership. problem 12 - 5a (algo) part 2 2. assume that benson does not retire from the partnership described in part 1. instead, rhode is admitted to the partnership on february 1 with a 25% equity. prepare journal entries to record rhodes entry into the partnership under each separate assumption: rhode invests (a) $83,333; (b) $60,833; and (c) $109,166. note: do not round intermediate calculations. view transaction list journal entry worksheet record the admission of rhode with an investment of $83,333 for a 25% interest in the equity. note: enter debits before credits. transaction general journal debit credit (a)

the following information applies to the questions displayed below. meir, benson, and lau are partners and share income and loss in a 2:3:5 ratio (in percents: meir, 20%; benson, 30%; and lau, 50%). the partnerships capital balances are as follows: meir, $48,000; benson, $74,000; and lau, $128,000. benson decides to withdraw from the partnership. problem 12 - 5a (algo) part 2 2. assume that benson does not retire from the partnership described in part 1. instead, rhode is admitted to the partnership on february 1 with a 25% equity. prepare journal entries to record rhodes entry into the partnership under each separate assumption: rhode invests (a) $83,333; (b) $60,833; and (c) $109,166. note: do not round intermediate calculations. view transaction list journal entry worksheet record the admission of rhode with an investment of $83,333 for a 25% interest in the equity. note: enter debits before credits. transaction general journal debit credit (a)

Answer

Explanation:

Step1: Calculate total existing capital

The existing capital of Meir ($48,000), Benson ($74,000) and Lau ($128,000) is $48000 + 74000+128000=$250,000$.

Step2: Case (a) - Rhode invests $83,333

The new total capital is $250000 + 83333=$333,333$. Rhode's 25% equity should be $0.25\times333333=$83,333.25\approx$83,333$. The journal entry is: Debit: Cash $83,333 Credit: Rhode, Capital $83,333

Step3: Case (b) - Rhode invests $60,833

The new total capital is $250000 + 60833=$310,833$. Rhode's 25% equity should be $0.25\times310833 = $77,708.25$. The bonus to existing partners is $77708.25 - 60833=$16,875.25$. This bonus is allocated among Meir, Benson and Lau in their 2:3:5 ratio. The sum of the ratio parts is $2 + 3+5 = 10$. Meir's share of bonus is $\frac{2}{10}\times16875.25=$3,375.05$ Benson's share of bonus is $\frac{3}{10}\times16875.25=$5,062.575$ Lau's share of bonus is $\frac{5}{10}\times16875.25=$8,437.625$ The journal entry is: Debit: Cash $60,833 Debit: Meir, Capital $3,375.05 Debit: Benson, Capital $5,062.575 Debit: Lau, Capital $8,437.625 Credit: Rhode, Capital $77,708.25

Step4: Case (c) - Rhode invests $109,166

The new total capital is $250000+109166=$359,166$. Rhode's 25% equity should be $0.25\times359166=$89,791.5$. The bonus from Rhode to existing partners is $109166 - 89791.5=$19,374.5$. This bonus is allocated among Meir, Benson and Lau in their 2:3:5 ratio. Meir's share of bonus is $\frac{2}{10}\times19374.5=$3,874.9$ Benson's share of bonus is $\frac{3}{10}\times19374.5=$5,812.35$ Lau's share of bonus is $\frac{5}{10}\times19374.5=$9,687.25$ The journal entry is: Debit: Cash $109,166 Credit: Rhode, Capital $89,791.5 Credit: Meir, Capital $3,874.9 Credit: Benson, Capital $5,812.35 Credit: Lau, Capital $9,687.25

Answer:

(a)

Transaction General Journal Debit Credit
(a) Cash $83,333
(a) Rhode, Capital $83,333
(b)
Transaction General Journal Debit Credit
---- ---- ---- ----
(b) Cash $60,833
(b) Meir, Capital $3,375.05
(b) Benson, Capital $5,062.575
(b) Lau, Capital $8,437.625
(b) Rhode, Capital $77,708.25
(c)
Transaction General Journal Debit Credit
---- ---- ---- ----
(c) Cash $109,166
(c) Rhode, Capital $89,791.5
(c) Meir, Capital $3,874.9
(c) Benson, Capital $5,812.35
(c) Lau, Capital $9,687.25