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Meir, Benson, and Lau are partners and share income and loss in a 2:3:5 ratio. The partnership's capital balances are as follows: Meir, $58,000; Benson, $89,000; and Lau, $153,000. Benson decides to withdraw from the partnership, and the partners agree not to have the assets revalued upon Benson's retirement.

Prepare the journal entry to record Benson's withdrawal from the partnership under each of the following independent assumptions. (Do not round intermediate calculations.)

Benson (a) sells her interest to North for $160,000 after Meir and Lau approve the entry of North as a partner; (b) gives her interest to a son-in-law, Schmidt, and thereafter Meir and Lau accept Schmidt as a partner; (c) is paid $89,000 in partnership cash for her equity; (d) is paid $127,000 in partnership cash for her equity; and (e) is paid $16,000 in partnership cash plus equipment recorded on the partnership books at $36,000 less its accumulated depreciation of $11,600.

Record the withdrawal of Benson sells her interest to North for $160,000 after Meir and Lau approve the entry of North as a partner.

Record the withdrawal of Benson on the assumption that she gives her interest to a son-in-law, Schmidt and thereafter Meir and Lau accept Schmidt as a partner.

Record the withdrawal of Benson on the assumption that she is paid $89,000 in partnership cash for her equity.

Record the withdrawal of Benson on the assumption that she is paid $127,000 in partnership cash for her equity.

Record the withdrawal of Benson on the assumption that she is paid $16,000 in partnership cash plus equipment recorded on the partnership books at $36,000 less its accumulated depreciation of $11,600 for her equity.

Assume that Benson does not retire from the partnership described in Part 1. Instead, Rhode is admitted to the partnership on February 1 with a 25% equity. Prepare journal entries to record Rhode’s entry into the partnership under each of the following separate assumptions: Rhode invests (a) $100,000; (b) $73,000; and (c) $131,000. (Do not round your intermediate calculations.)

Record the admission of Rhode with an investment of $100,000 for a 25% interest in the equity.

Record the admission of Rhode with an investment of $73,000 for a 25% interest in the equity.

Record the admission of Rhode with an investment of $131,000 for a 25% interest in the equity.

Answer 1

Answer- 1

a) Benson sells her interest to North for $160,000:

Date	Account Title and Explanation	Debit	Credit
a)	Benson's Capital	89000
	North's Capital		89000
	(To record withdrawal of Benson from partnership)

Note: Transaction will be recorded at book value of Benson’s capital, payment of $ 160,000 by North is personal transaction with Benson.

b) Benson gives her interest to a son-in-law, Schmidt.

Date	Account Title and Explanation	Debit	Credit
b)	Benson's Capital	89000
	Schmidt's Capital		89000
	(To record withdrawal of Benson from partnership)

c) Benson is paid $89,000 in partnership cash for her equity:

Date	Account Title and Explanation	Debit	Credit
c)	Benson's Capital	89000
	Cash		89000
	(To record withdrawal of Benson from partnership)

d) Benson is paid $127,000 in partnership cash for her equity:

Date	Account Title and Explanation	Debit	Credit
d)	Benson's Capital	89000
	Meir's Capital (127000 - 89000) * 2/7	10857
	Lau's Capital (127000 - 89000) * 5/7	27143
	Cash		127000
	(To record withdrawal of Benson from partnership with bonus to Benson)

e) Benson is paid $16,000 in partnership cash plus equipment recorded on the partnership books at $36,000 less its accumulated depreciation of $11,600.

Date	Account Title and Explanation	Debit	Credit
e)	Benson's Capital	89000
	Cash		16000
	Equipment (36,000 - 11600)		24400
	Meir's Capital (89000 - 16000 - 24400) * 2/7		13886
	Lau's Capital (89000 - 16000 - 24400) * 5/7		34714
	(To record withdrawal of Benson from partnership with bonus to remaining partner)

Answer- 2:

a) Rhode is admitted with an investment of $100,000

Total Capital of Existing Partners (58k + 89k + 153k) = 300,000

Add: Capital brought by new partner Rhodes = 100,000

Total Capital = 400,000

Rohde’s share = 400,000 * 25% = 100,000

No Bonus is paid or received by old partners.

Date	Account Title and Explanation	Debit	Credit
a)	Cash	100000
	Rhode's Capital		100000
	(To record the admission of Rhode in partnership)

b) Rhode is admitted with an investment of $73,000

Total Capital of Existing Partners (58k + 89k + 153k) = 300,000

Add: Capital brought by new partner Rhodes = 73,000

Total Capital = 373,000

Rohde’s share = 373,000 * 25% = 93,250

Bonus is paid to Rhode $ 20,250 to be shared by old partners in 2:3:5

Date	Account Title and Explanation	Debit	Credit
b)	Cash	73000
	Meir's Capital (20,250*2/10)	4050
	Benson's Capital (20,250*3/10)	6075
	Lau's Capital (20,250*5/10)	10125
	Rhode's Capital		93250
	(To record the admission of Rhode in partnership and Bonus)

c) Rhode is admitted with an investment of $131,000

Total Capital of Existing Partners (58k + 89k + 153k) = 300,000

Add: Capital brought by new partner Rhodes = 131,000

Total Capital = 431,000

Rohde’s share = 373,000 * 25% = 107,750

Bonus is paid by Rhode $ 23,250 to be shared by old partners in 2:3:5

Date	Account Title and Explanation	Debit	Credit
c)	Cash	131000
	Rhode's Capital		107750
	Meir's Capital (23,250*2/10)		4650
	Benson's Capital (23,250*3/10)		6975
	Lau's Capital (23,250*5/10)		11625
	(To record the admission of Rhode in partnership and Bonus)

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