The Distance Plus partnership has the following capital balances at the beginning of the current year:
Tiger (50% of profits and losses) . . . . . . . . . . . . . . . $85,000
Phil (30%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000
Ernie (20%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,000
a. If Sergio invests $100,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the bonus method is used.
b. If Sergio invests $60,000 in cash in the business for a 25 percent interest, what journal entry is recorded? Assume that the bonus method is used.
a. Cash $100,000
Tiger's capital 12,500
Phil's capital 7,500
Ernie's capital 5,000
Sergio's capital 75,000
b. Cash $60,000
Tiger's capital 2,500
Phil's capital 1,500
Ernie's capital 1,000
Sergio's capital 65,000
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