Answer and Explanation:
Before recording the journal entries first we need to do following calculations
Total amount paid is
= $32,000 + $40,000
= $72,000
And the interest ratio is 30%
So fair value of assets is
= $72,000 ÷ 30%
= $240,000
And, the current net assets is
= $80,000 + $100,000
= $180,000
So, the goodwill is
= $240,000 - $180,000
= $60,000
This amount is distributed in 2 : 3 ratio
For Jipson = $24,000
For Klark = $36,000
Now the journal entries are
1. Goodwill $60,000
To Jipson capital $24,000
To Klark capital $36,000
(being the goodwill is recorded)
2. Jipson capital ($80,000 + $24,000) × 30% $31,200
Klark capital ($100,000 + $36,000) × 30% $40,800
To Looney capital $72,000
(Being the admission of Looney is recorded)
