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.

Question

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The Answer of 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.

Carter and Gore Are Partners in an Automobile Repair Business