Question

19. All nominal accounts have been adjusted and Jordan Pinen Ordan, Pipen and Kerr are partners with capital balances of $75,000, $126,00 $61,500, respectively on lanuary 26 2019. All nominal accounts have Tosed as of January 26, 2019. The partnerschare profits and losses according to the following percentages: 35% for Jordan 4 no percentages: 35% for lordan 400 for Pinen and 25% for Kerr. On January 26, 2019, Rodman is to join the partnershin non contributing $67.500 in cash and some equipment with a book value of $14.500 and a fair value of $16.500 to the partnership, in exchange for a 20% interest in capital and a 200% interest in profits and losses. The existing assets of the original partnership are undervalued by $42.600, of which $31,500 relates to land and $11,100 relates to inventory. If necessary, the partnership will recognize goodwill. The original partners will share the balance of profits and losses in proportion to their original percentages. REQUIRED: Prepare the journal entries necessary to record the above events. February 21, 2019, the partnership suffered a hurricane loss of $180,000. The partnership insurance policy includes a 15% deductible. How must of this loss should be absorbed by each partner.

Answer 1

Please find the attachments with workings : Answer 1 & Answer 2

Answer to question 1 Journal Entries in the books of partnership firm Dr Date Particulars LF Amount $ Amount $ 26.01.2019 Cash Account Debit 67500 Equipment Account Debit 16500 To Rodman's Capital Account 84000 (Being capital brought by new partner (Rodman partially by cash and asset (equipment) at a fair value.) 14910 17040 10650 26.01.2020 Jordan's Capital Account Debit Pipen's Capital Account Debit Kerr's Capital Account Debit To Revaluation Account (Being the loss due to undervaluation of assets transferred to old partners capital Account in their profit sharing ratio 35:40:25) 42600 Answer to question 2: The loss due to Hurricane will be absorbed by the partners in the new profit sharing ration of 28:32:20:20 as mentioned below: Jordan Pipen Kerr Rodman 42840 48960 30600 306001