On January 1, 2021, Lamb and Mona LLP admitted Norris to a 20% interest in net assets for an investment of $50,000 cash. Prior to the admission of Norris, Lamb and Mona had net assets of $100,000 and an income-sharing ratio of 25% to Lamb and 75% to Mona. After the admission of Norris, the partnership contract included the following provisions:Salary of $40,000 a year to Norris.Remaining net income in ratio Lamb 20%, Mona 60%, Norris 20%.During the fiscal year ended December 31, 2021, the partnership had income of $90,000 prior to recognition of salary to Norris.Record the journal entry for the admission of Norris. Goodwill is not to be recorded.

Question

Quizplus · Accepted Answer

The Answer of On January 1, 2021, Lamb and Mona LLP admitted Norris to a 20% interest in net assets for an investment of $50,000 cash. Prior to the admission of Norris, Lamb and Mona had net assets of $100,000 and an income-sharing ratio of 25% to Lamb and 75% to Mona. After the admission of Norris, the partnership contract included the following provisions:Salary of $40,000 a year to Norris.Remaining net income in ratio Lamb 20%, Mona 60%, Norris 20%.During the fiscal year ended December 31, 2021, the partnership had income of $90,000 prior to recognition of salary to Norris.Record the journal entry for the admission of Norris. Goodwill is not to be recorded.

On January 1, 2021, Lamb and Mona LLP Admitted Norris