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Suppose Sean is withdrawing from the partnership of Sean, Mohid, and Beth. The partners share profits...

Suppose Sean is withdrawing from the partnership of Sean, Mohid, and Beth. The partners share profits and losses in a 1:2:3 ratio for Sean, Mohid, and Beth, respectively. After the revaluation of assets, Sean’s Capital balance is $40,000, and the other partners agree to pay him $30,000. Mohid and Beth agree to a new profit-and-loss-sharing ratio of 2:3 for Mohid and Beth, respectively. Journalize the payment to Sean for his withdrawal from the partnership on August 31.

5 Journalize withdrawal of a partner

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Expert Solution

ANSWER

JOURNAL ENTRY FOR WITHDRAWAL OF PARTNER

AS SEAN IS WITHDRAWING , IT IS ASSUMED THAT $ 30000 IS GIVEN BY MOHID AND BETH TO SEAN AS GOODWILL SHARE IN RATIO OF 2:3 BY MOHID AND BETH RESPECTIVELY. $ 12000 BY MOHID AND $ 18000 BY BETH

JOURNAL ENTRY WILL BE ON 31ST AUGUST

MOHID CAPITAL A/C DR...........................$12000

BETH CAPITAL A/C DR.............................$18000

TO SEAN CAPITAL A/C CR..............................$30000

(BEING GOODWILL AMOUNT GIVEN TO SEAN BY OTHER PARTNERS )

NOW SEAN BALANCE AMOUNT IN HIS CAPITAL WILL BE $ 40000+$30000=$70000

JOURNAL ENTRY WILL BE

SEAN CAPITAL A/C DR......................$70000

TO BANK A/C DR..................................$70000

(BEING PAYMENT DONE TO SEAN ON WITHDRAWAL FROM PARTNERSHIP)

jeff jeffy answered 2 years ago
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