# Answered Essay: interest of 7 percent is given to each partner based on beginning

Prince is allocated 60 percent of all profits and losses with the remaining 40 percent assigned to Robbins after interest of 7 percent is given to each partner based on beginning capital balances. On January 2, 2018, Jeffrey invests \$58,000 cash for a 20 percent interest in the partnership. This transaction is recorded by the goodwill method. After this transaction, 7 percent interest is still to go to each partner. Profits and losses will then be split as follows: Prince (50 percent), Robbins (30 percent), and Jeffrey (20 percent). In 2018, the partnership reports a net income of \$18,000. a. Prepare the journal entry to record Jeffrey’s entrance into the partnership on January 2, 2018. b. Determine the allocation of income at the end of 2018. Determine the allocation of income at the end of 2018.

 Answer a. Journal Entry Date Particulars Dr. Amt. Cr. Amt. a (1) Goodwill                                  Dr. 32,000.00 To Prince Capital Account 19,200.00 To Robbin Capital Account 12,800.00 a (2) Cash                                            Dr. 58,000.00 To Jeffrey Capital Account 58,000.00 Total Capital After Jeffrey Admission = \$105,000 + \$95,000 + \$58,000 Total Capital After Sergio Admission = \$258,000 Implied Value of Business (based on new investment) = 58,000 / 20% = \$290,000 So, Goodwill of \$32,000 (\$290,000 – \$258,000) should be recognized and divided beween the old partners in their old Profit sharing ratio Prince Capital Account = \$32,000 X 60% = \$19,200 Robbins Capital Account   = \$32,000 X 40% = \$12,800 Answer b. Allocation of Income Prince Robbins Jeffrey Total Interest Paid 8,694 7,546 4,060 20,300 Balance Profit – 50:30:20 (1,150) (690) (460) (2,300) Total 7,544 6,856 3,600 18,000 Interest Paid on Capital: Prince – \$124,200 X 7% 8,694 Robbins – \$107,800 X 7% 7,546 Jeffrey – \$58,000 X 7% 4,060
Pages (550 words)
Approximate price: -

Help Me Write My Essay - Reasons:

Best Online Essay Writing Service

We strive to give our customers the best online essay writing experience. We Make sure essays are submitted on time and all the instructions are followed.

Our Writers are Experienced and Professional

Our essay writing service is founded on professional writers who are on stand by to help you any time.

Free Revision Fo all Essays

Sometimes you may require our writers to add on a point to make your essay as customised as possible, we will give you unlimited times to do this. And we will do it for free.

Timely Essay(s)

We understand the frustrations that comes with late essays and our writers are extra careful to not violate this term. Our support team is always engauging our writers to help you have your essay ahead of time.

Customised Essays &100% Confidential

Our Online writing Service has zero torelance for plagiarised papers. We have plagiarism checking tool that generate plagiarism reports just to make sure you are satisfied.

Try it now!

## Calculate the price of your order

Total price:
\$0.00

How it works?

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

HOW OUR ONLINE ESSAY WRITING SERVICE WORKS

Let us write that nagging essay.

By clicking on the "PLACE ORDER" button, tell us your requires. Be precise for an accurate customised essay. You may also upload any reading materials where applicable.

Pick A & Writer

Our ordering form will provide you with a list of writers and their feedbacks. At step 2, its time select a writer. Our online agents are on stand by to help you just in case.

Editing (OUR PART)

At this stage, our editor will go through your essay and make sure your writer did meet all the instructions.