El Paso Physicians is a partnership of three doctors. The partners share profits and losses in the ratio of \(20 \%\) to Juan Hernandez, \(40 \%\) to Rosa Garcia, and 40\% to Eva Cahill. At December 31, 2008, the firm has the following balance sheet:

Garcia withdraws from the partnership on December 31, 2008, to establish her own medical practice.

Requirements 

Record Garcia's withdrawal from the partnership under the following plans:

1. In a personal transaction, Garcia sells her equity to Maria Martinez, who pays Garcia \(\$ 100,000\) for her interest. Hernandez and Cahill accept Martinez as a partner.

2. The partnership pays Garcia cash of \(\$ 20,000\) and gives her a note payable for the remainder of her book equity in settlement of her partnership interest.

3. The partnership pays Garcia cash of \(\$ 80,000\).

4. The partners agree that the building is worth only \(\$ 250,000\) and that its accumulated depreciation should remain at \(\$ 70,000\). After the revaluation, the partnership settles with Garcia by giving her cash of \(\$ 10,000\) and a note payable for the remainder of her book equity. 

Transcribed Image Text:

Cash $ 12,000 Total liabilities $ 75,000 Accounts receivable $22,000 Less allowance for uncollectibles (4,000) 18,000 Building $310,000 Hernandez, capital 83,000 Less accumulated Garcia, capital 50,000 depreciation (70,000) 240,000 Cahill, capital 62,000 Total assets $270,000 Total liabilities and capital $270,000