In the JK partnership, Jacob's capital is $140,000, and Katy's is $40,000. They share income in a 3:2 ratio, respectively. They decide to admit Erin to the partnership. Each of the following questions is independent of the others.
-Refer to the information provided above.Assume that Erin invests $40,000 for a one-fifth interest.Goodwill is to be recorded.The journal entry to record Erin's admission into the partnership will include

Question

Quizplus · Accepted Answer

Goodwill is recorded to adjust the capital accounts to reflect Erin's one-fifth interest. Erin's capital should be $45,000 (one-fifth of the total partnership capital after her investment), so the entry includes a credit to Erin, Capital for $45,000.

In the JK Partnership, Jacob's Capital Is $140,000, and Katy's