Margaret, Tracy, and Lou are partners in Woodwork Company. Their capital balances as of July 31, 2011,

Question:

Margaret, Tracy, and Lou are partners in Woodwork Company. Their capital balances as of July 31, 2011, are as follows:

Each partner has agreed to admit Vonice to the partnership.

REQUIRED

Prepare the entries to record Vonice’s admission to or Margaret’s withdrawal from the partnership under each of the following conditions

a. Vonice pays Margaret $12,500 for 20 percent of Margaret’s interest in the partnership.

b. Vonice invests $20,000 cash in the partnership and receives an interest equal to her investment.

c. Vonice invests $30,000 cash in the partnership for a 20 percent interest in the business. A bonus is to be recorded for the original partners on the basis of their capital balances.

d. Vonice invests $30,000 cash in the partnership for a 40 percent interest in the business. The original partners give Vonice a bonus according to the ratio of their capital balances on July 31, 2011.

e. Margaret withdraws from the partnership, taking $52,500. The excess of withdrawn assets over Margaret’s partnership interest is distributed according to the balances of the Capital accounts.

f. Margaret withdraws by selling her interest directly to Vonice for $60,000.

Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...