Question

Pam and John are partners in PJ's partnership, having capital balances of $120,000 and$40,000, respectively, and share income in a ratio of 3 : 1. Gerry is to be admitted into the partnership with a 20 percent interest in the business.


Required

First record Gerry's admission into the partnership and then specify and briefly explain why the accounting method used in that situation is GAAP or non-GAAP.

  • Gerry invests $50,000, and goodwill is to be recorded.

Solution

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Answered 1 year ago
Answered 1 year ago
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In this problem, we are asked to prepare journal entries for Gerry's admission in the partnership and identify if the method used is GAAP or Non-GAAP method.

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