Han Solo and Chewbacca are partners in a transport business…
Han Solo and Chewbacca are partners in a transport business and share profits and losses in the ratio of 3:2, respectively. Prior to recording the admission of Lando Calrissian as a new partner, Han has a capital balance of $80,000 and Chewbacca has a capital balance of $40,000. Required: For each of the following independent cases, use the field below to prepare the journal entry to record the admission of Lando to the partnership. In your response, be sure to specify which item you are answering by numbering your responses (1, 2, 3, 4, or 5). Lando purchased 20% of the respective capital balances of Han and Chewbacca, paying $12,000 cash and $8,000 cash directly to Han and Chewbacca, respectively. Lando invested $20,000 cash in the partnership for a 10% ownership interest. The partners agree that any difference between Lando’s investment and his proportionate book value is due to a change in value of the partnership’s main asset, the Millenium Falcon (equipment). Lando invested $40,000 cash in the partnership for a 20% ownership interest. Total capital after Lando’s admission is to be $160,000. Lando invested $50,000 cash in the partnership for a 20% ownership interest. The partners agree that the existing assets of the partnership are correctly valued. Lando will not accept a capital credit for less than his investment. Lando invested $30,000 cash in the partnership for a 25% ownership interest. The partners agree that the existing assets of the partnership are correctly valued. During negotiations, Han and Chewbacca refused to have their capital balances changed as a result of Lando’s admission.