Question

Problem 12-5A Partner withdrawal and admission LO P3, P4

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Meir, Benson, and Lau are partners and share income and loss in a 1:4:5 ratio (in percents: Meir, 10%; Benson, 40%; and Lau, 50%). The partnership's capital balances are as follows: Meir, $28,000; Benson, $119,000; and Lau, $153,000. Benson decides to withdraw from the partnership.

Problem 12-5A Part 1

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

(a) Benson sells her interest to North for $160,000 after North is approved as a partner; (b) Benson gives her interest to a son-in-law, Schmidt, and Schmidt is approved as a partner; (c) Benson is paid $119,000 in partnership cash for her equity; (d) Benson is paid $157,000 in partnership cash for her equity; and (e) Benson is paid $15,500 in partnership cash plus equipment recorded on the partnership books at $35,500 less its accumulated depreciation of $11,600.
  

Journal entry worksheet < 1 1 2 3 4 5 Record the withdrawal if Benson sells her interest to North for $160,000 after North is approved as a partner. Note: Enter debits before credits. General Journal Debit Credit Transaction (a) Record entry Clear entry View general journal

Answer 1

Transaction	Accounts title and explanations	Debit	Credit
a.	Benson Capital	$119,000
	North Capital		$119,000
	To record sale if interest in Partnership to North
b.	Benson Capital	$119,000
	Schmidt Capital		$119,000
	To record transfer of interest in Partnership to Schmidt
c.	Benson Capital	$119,000
	Cash		$119,000
	To record cash paid for withdrawal of Benson
d.	Benson Capital	$119,000
	Goodwill	$38,000
	Cash		$157,000
	To record cash paid for withdrawal of Benson
e.	Benson Capital	$119,000
	Cash		$15,500
	Machinery (35500-11600)		$23,900
	Reserve		$79,600
	To record withdrawal of Benson from Partnership