On January 1, 2018, Lamb and Mona LLP admitted Noris to a 20% interest in net assets for an investment of $50,000 cash. Prior to the admission of Noris, Lamb and Mona had net assets of $100,000 and an income-sharing ratio of 25% to Lamb and 75% to Mona. After the admission of Noris, the partnership contract included the following provisions:? Salary of $40,000 a year to Noris. ? Remaining net income in ratio Lamb 20%, Mona 60%, Noris 20% ? During the fiscal year ended December 31, 2018, the partnership had income of $90,000 prior to recognition of salary to Noris.Record the journal entry for the admission of Noris. Goodwill is not to be recorded.
What will be an ideal response?
| Cash | 50,000 | |
| Lamb, Capital ($20,000 × 0.25) | 5,000 | |
| Mona, Capital ($20,000 × 0.75) | 15,000 | |
| Norris, Capital ($150,000 × 0.20) | 30,000 | |
? | ||
| ? | ||
| After the contribution from Noris, total capital = $150,000. Noris receives 20% of this = $30,000, but Noris is contributing $50,000. Thus, the $20,000 excess contribution is allocated to the original partners in their 25:75 ratio. | ||
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