Question

what happens to the amount of withdrawal if there are assets due from one of the partners who will withdraw from partnership

1. The withdrawal of Eli. Hw Problem 2 Rachel permitted to withdraw from the firm on Dec. 31, 2019. The partnership's state hel share profits in the ratio of 5:3:2 financial position on this date is as follows: Assets Liabilities & Capital Due from Rachel P 4,000 Liabilities P 32,000 Goodwill 32,000 Due to Rebekah 12,000 Other Assets 76,000 Sarah, Capital 28,000 Rebekah, Capital 24,000 Rachel, Capital 16,000 Total P112,000 Total P112,000 Required: Prepare entries assuming that: 1. Rachel is paid P16,000 in full settlement of the capital interest. 2. Rachel is paid P9,600 in full settlement. Problem 3

Answer 1

1. Rachel Capital Dr. 16000

To Cash 16000

(Being payment of capital interest)

2. Rachel is paid 9600 in full settlement. This means the amount is paid for Goodwill in Firm after reducing the liabilities due from Rachel.

Amount paid for Goodwill = 9600+4000=13600.

Sarah Current A/c. Dr 8500

Rebel Current A/c . Dr 5100

To Rachel Current A/c. 13600

(Being amount due for Goodwill)

Rachel Current A/c Dr 9600

To Cash. (13600-4000) 9600

(Being amount paid)

The amount due for Rachel is reduced while paying for Goodwill.