Accounting of Partners' Capital in a Start-up

[saj72]

Phase 1

A company is formed with 4 Partners; One Key Promoter; one Co-promoter and Two investing partners. Their respective Cash Investments in the company are as below:-

Partner A $ 25000

Partner B $ 30000

Partner C $ 150000

Partner D S 100000

Since Partners A & B are Promoters; the stakes should be shown as below:-

Partner A 55%

Partner B 20%

Partner C 15%

Partner D 10%

Can someone please advise on how to account this to keep the capital in the above ratio?

Phase-2

After a few months of successful operation; Partner A sells 5% of his stake for a value of $ 250,000 to bring the stakes down to the following ratio:-

Partner A 50%

Partner B 20%

Partner C 15%

Partner D 10%

Partner E (New Partner) 5%

Can you please advise on what entries to be passed/how to account the above scenario?

Thanks

 

[Drmdcpa]

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