Meir, Benson, and Lau are partners and share income and loss in a 2:3:5 ratio. T
ID: 2432721 • Letter: M
Question
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.
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 $14,000 in partnership cash plus equipment recorded on the partnership books at $34,000 less its accumulated depreciation of $11,600.
Journal entry worksheet 2 3 4 5 Record the withdrawal of Benson on the assumption that she is paid $127,000 in partnership cash for her equity. Note: Enter debits before credits Transaction General Journal Debit Credit Benson, Capital Meir, Capital Lau, Capital 89,000 Cash 127,000Explanation / Answer
Important note: Kindly re-check whether profit sharing ratio given 2:3:5 is correct or it is 3:2:5 since all calculations are resulting in decimal answers.
Amounts rounded off to the nearest whole dollar in absence of any instructions regarding the same.
*[($127000 - $89000) x 2/7]
**[($127000 - $89000) x 5/7]
*[$89000 - ($34000 - $11600 + $14000) x 2/7]
**[$89000 - ($34000 - $11600 + $14000) x 5/7]
Transaction General Journal Debit Credit (d) Benson, capital 89000 Meir, capital* 10857 Lau, capital** 27143 Cash 127000 (To record withdrawal of Benson)