Bobbi and Stuart are partners, with capital contributions of $40,000 and $70,000 respectively. Bobbi sells his partnership interest to John for $50,000. The journal entry to record John joining the partnership would credit John's capital account for $40,000, representing the value of Bobbi's partnership interest he acquired.

1. Bobbi and Stuart are partners. The partnership capital of Bobbi is $40,000 and Stuart is $70,000.
Bobbi sells his interest in the partnership to John for $50,000. The journal entry to record the
admission of John as a new partner would include
a. a credit to John's capital for $40,000 and a credit to Stuart's capital for $10,000.
b. a credit to Stuart's capital for $10,000. {C}
c. a credit John's capital for $50,000.
d. a credit to John's capital for $40,000.
Solution
The correct answer is Option-d:- a credit to John's capital for $40,000.
Reason:-Bobi is selling his interest in the partnership (capital of $40000) to John for
$50000.The excess $10000 can be said as a payment of goodwill by John to Bobi.