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    Computation: TCC Bonus TAC

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    yowatdafrick
    The document describes a partnership admitting a new partner, Cyril. It provides information on the capital balances and profit/loss ratios of the existing partners Vir, Willard, and Manny. Cyril will invest $120,000 for a one-third capital interest. The document explains how to record Cyril's admission using the bonus method, distributing bonuses to existing partners, and the goodwill method, allocating a goodwill amount to Cyril.

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    Computation: TCC Bonus TAC

    Uploaded by

    yowatdafrick
    21 views3 pages
    The document describes a partnership admitting a new partner, Cyril. It provides information on the capital balances and profit/loss ratios of the existing partners Vir, Willard, and Manny. Cyril will invest $120,000 for a one-third capital interest. The document explains how to record Cyril's admission using the bonus method, distributing bonuses to existing partners, and the goodwill method, allocating a goodwill amount to Cyril.

    Original Title

    inventory12.docx

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    The document describes a partnership admitting a new partner, Cyril. It provides information on the capital balances and profit/loss ratios of the existing partners Vir, Willard, and Manny. Cyril will invest $120,000 for a one-third capital interest. The document explains how to record Cyril's admission using the bonus method, distributing bonuses to existing partners, and the goodwill method, allocating a goodwill amount to Cyril.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    21 views3 pages

    Computation: TCC Bonus TAC

    Uploaded by

    yowatdafrick
    The document describes a partnership admitting a new partner, Cyril. It provides information on the capital balances and profit/loss ratios of the existing partners Vir, Willard, and Manny. Cyril will invest $120,000 for a one-third capital interest. The document explains how to record Cyril's admission using the bonus method, distributing bonuses to existing partners, and the goodwill method, allocating a goodwill amount to Cyril.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    The capital balances and the income and loss sharing ratio of the partners Vir, Willard and

    Manny are as follows:

    Capital Balance P &L Ratio


    Vir P1150,000 2
    Willard 125,000 1
    Manny 100,000 2

    The partnership has been successful and the partners have decided to invite Cyril to join
    them. Cyril has been admitted into the partnership with a one-third capital interest for a cash
    investment of PI 20,000. The net assets of the partnership are fairly valued.

    Instructions: Prepare the entries to record the admission of Cyril under the (l) bonus method
    and (2) goodwill method.

    1) Bonus Method

    Computation:

    TCC Bonus *bonus computation TAC


    Vil 150,000 (18,000) -45,000 x 2/5= -18,000 132,000
    Willard 125,000 (9,000) -45,000 x 1/5 = -9,000 116,000
    Manny 100,000 (18,000) -45,000 x 2/5 = -18,000 82,000
    Cyril 120,000 45,000 165,000 *(495,000 x 1/3)
    P 495,000 P 495,000

    Journal Entry:

    Cash 120,000
    Vir, Capital 18,000
    Willard, Capital 9,000
    Manny, Capital 18,000
    Cyril, Capital 165,000

    2) Goodwill Method

    Computation:

    TCC TAC *AC Computation Goodwill


    Old (2/3) 375,000 375,000 562,500 x 2/3 = 375,000 0
    New (1/3) 120,000 187,500 562,500 x 1/3 = 187,500 67,500
    495,000 562,5000 67,500

    TAC (old partner) = 375,000 / 2/3 = 562,500 TAC (new partner) = 120,000 / 1/3 = 360,000

    This study source was downloaded by 100000833075284 from CourseHero.com on 03-01-2022 09:13:14 GMT -06:00

    https://www.coursehero.com/file/89477719/inventory12docx/
    AC= 562,500 x 2/3 = 375,000

    AC= 562,500 x 1/3 = 187,500

    This study source was downloaded by 100000833075284 from CourseHero.com on 03-01-2022 09:13:14 GMT -06:00

    https://www.coursehero.com/file/89477719/inventory12docx/
    Journal Entry:

    Cash 120,000

    Goodwill 67,500

    Cyril, Capital 187,500

    This study source was downloaded by 100000833075284 from CourseHero.com on 03-01-2022 09:13:14 GMT -06:00

    https://www.coursehero.com/file/89477719/inventory12docx/
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