In the AD partnership, Allen's capital is $140,000 and Daniel's is $40,000 and they share income in a 3:1 ratio, respectively. They decide to admit David to the partnership. Each of the following question is independent of the others.
Refer to the information provided above. Assume that David invests $50,000 for a one-fourth interest. Goodwill is to be recorded. The journal to record David's admission into the partnership will include:

Question

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David's investment of $50,000 for a one-fourth interest implies the total partnership value is $200,000 ($50,000 x 4). The existing capital is $180,000 ($140,000 + $40,000), so goodwill of $20,000 is implied. David's capital account is credited with $60,000 ($50,000 investment + $10,000 goodwill share).

In the AD Partnership, Allen's Capital Is $140,000 and Daniel's