Accounting for withdrawal of a partnerHu-Kang-Lo Oriental Design is a partnership owned by...

Accounting for withdrawal of a partner

Hu-Kang-Lo Oriental Design is a partnership owned by three individuals. The partners share profits and losses in the ratio of 30% to Hu, 40% to Kang, and 30% to Lo. At December 31, 2012, the firm has this balance sheet:

Hu withdraws from the partnership on this date.

Requirements

Record Hu’s withdrawal from the partnership under the following independent plans:

1. In a personal transaction, Hu sells her equity to Win, who pays Hu $110,000 for her interest. Kang and Lo agree to accept Win as a partner.

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2. The partnership pays Hu cash of $5,000 and gives her a note payable for the remainder of her book equity in settlement of her partnership interest.

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3. The partnership pays Hu $50,000 for her book equity.

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4. The partners agree that the equipment is worth $146,000 and that accumulated depreciation should remain at $39,000. After the revaluation, the partnership settles with Hu by giving her cash of $10,000 and inventory for the remainder of her book equity.