On September 1, 2005, Fox & George LLP admitted Lucille Hayes to a 20% interest in net assets for an investment of $50,000 cash. Prior to the admission of Hayes, Fox & George LLP had net assets of $100,000 and an income-sharing ratio of Fox-25%, George-75%. After the admission of Hayes, the partnership contract included the following provisions:
Salary of $40,000 a year to Hayes, to be recognized as partnership expense
Resultant net income in ratio Fox-20%, George-60%, Hayes-20%
During the fiscal year ended August 31, 2006, Fox, George & Hayes LLP had an income of $90,000 prior to recognition of salary to Hayes.

Prepare journal entries for Fox, George & Hayes LLP to record the admission of Hayes on September 1, 2005, and the division of income among the partners on August 31, 2006.

Question

On September 1, 2005, Fox & George LLP admitted Lucille Hayes to a 20% interest in net assets for an investment of $50,000 cash. Prior to the admission of Hayes, Fox & George LLP had net assets of $100,000 and an income-sharing ratio of Fox-25%, George-75%. After the admission of Hayes, the partnership contract included the following provisions:
 Salary of $40,000 a year to Hayes, to be recognized as partnership expense
 Resultant net income in ratio Fox-20%, George-60%, Hayes-20%
 During the fiscal year ended August 31, 2006, Fox, George & Hayes LLP had an income of $90,000 prior to recognition of salary to Hayes.
 
 Prepare journal entries for Fox, George & Hayes LLP to record the admission of Hayes on September 1, 2005, and the division of income among the partners on August 31, 2006.

Quizplus · Accepted Answer

The Answer of On September 1, 2005, Fox & George LLP admitted Lucille Hayes to a 20% interest in net assets for an investment of $50,000 cash. Prior to the admission of Hayes, Fox & George LLP had net assets of $100,000 and an income-sharing ratio of Fox-25%, George-75%. After the admission of Hayes, the partnership contract included the following provisions:
 Salary of $40,000 a year to Hayes, to be recognized as partnership expense
 Resultant net income in ratio Fox-20%, George-60%, Hayes-20%
 During the fiscal year ended August 31, 2006, Fox, George & Hayes LLP had an income of $90,000 prior to recognition of salary to Hayes.
 
 Prepare journal entries for Fox, George & Hayes LLP to record the admission of Hayes on September 1, 2005, and the division of income among the partners on August 31, 2006.

On September 1, 2005, Fox & George LLP Admitted Lucille