Accounting and Financial Reporting II

On December 31, a partnership has total partnership capital as follows:

Partner #1, capital 100,000

Partner #2, capital 150,000

Partner #3, capital 200,000

Total partnership capital 450,000

The partners allocate income and losses 20% to partner #1, 30% to partner #2 and 50% to partner #3. On December 31, Partner #3 retires from the partnership and is paid $225,000 in PARTNERSHIP cash to settle his interest in the partnership. Prepare any necessary journal entries on the books of the partnership on December 31.