Question

K. Kolmer, C. Eidman, and C. Ryno share income on a 5 : 3 : 2 basis. They have capital balances of $26,200, $29,400, and $15,300, respectively, when Don Jernigan is admitted to the partnership. Prepare the journal entry to record the admission of Don Jernigan under each of the following assumptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.) (a) Purchase of 50% of Kolmer’s equity for $18,900. (b) Purchase of 50% of Eidman’s equity for $7,400. (c) Purchase of 331/3% of Ryno’s equity for $11,000.

Answer 1

Answer and Explanation:

The Journal entry is shown below:-

a. K. Kolmer Capital Dr, $13,100    ($26,200 × 50%)

         To Don Jernigan Capital $13,100

(Being purchase of equity is recorded)

Here we debited the K. Kolmer Capital as it reduced the stockholder equity and we credited the Don Jernigan Capital as  it increased the stockholder equity

b. C. Eidman Capital Dr, $14,700    ($29,400 × 50%)

                 To Don Jernigan Capital $14,700

(Being  purchase of equity  is recorded)

Here we debited the C. Eidman Capital as it reduced the stockholder equity  and we credited the Don Jernigan Capital as  it increased the stockholder equity

c. C. Ryno Capital Dr, $5,100             ($15,300 × 33.33%)

               To Don Jernigan Capital $5,100

(Being purchase of equity is recorded)

Here we debited the C. Ryno Capital as it reduced the stockholder equity  and we credited the Don Jernigan Capital as it increased the stockholder equity