Jeremey, Matthew, and Grace are partners. On July 30, 201X, the balance sheet was as follows: The

Question:

Jeremey, Matthew, and Grace are partners. On July 30, 201X, the was as follows:

The partners agree to share all losses and gains in a 2:2:1 ratio. Grace is withdrawing from the partnership. From the following independent situations, journalize the withdrawal of Grace:
Situation 1: Grace sells her equity to Chris for $18,000. Partners agree to admission of Chris.
Situation 2: On withdrawal of Grace, inventory is determined to be overvalued by $1,500. (Before withdrawal, assets are revalued to current fair market value.) Be sure to record the entry to revalue inventory as well as the withdrawal of Grace.
Situation 3: Grace is paid $3,100 out of the assets of the partnership. Because the assets are overvalued, the partners do not want to decrease the recorded asset values.
Situation 4: Grace is paid $8,500 out of the assets of the partnership. Because the assets are undervalued, the partners do not want to increase the recorded asset values.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...