Learning Goal: I’m working on a accounting project and need the explanation and answer to help me learn.
Paul and Macarthy, who are in partnership sharing profits and losses in the ratio of 3: 1, admit Michelle into partnership on the following terms:
Profits among the three are to be shared in the ratio of 2:3: 1. The firm’s goodwill which does not appear in the books is valued at 30,000. Michelle brings her required share of premium, which is shared by Paul and Macarthy.
Set out the Journal entries to record the transactions, and clearly show the working notes that justify such entries.
