BE 12-1

Madson? al partnership. Assumi U v pald to has a $68,000 capital balance in the par journal entry is made by the partner Before the final distribution of cash, account balances this transaction? a Cash $27.000; S. Shea, Capital $19,000 (Cr.); L. "21. Jaime Keller has a $41,000 capital by Seastrom, Capital $12,000 (Cr.); and M. Luthi, Capital nership. She sells her interest to San $4.000 (Dr.). Luthi is unable to pay any of the capital $45,000 cash. What entry is made by deficiency. If the income-sharing ratios are 5:3:2, respec- for this transaction? tively, how much cash should be paid to L. Seastrom? *2) Andrea Riley retires from the partn 17. Why is Apple not a partnership? Pester, and Riley. She receives $85, 18. Susan Turnbull decides to purchase from an existing assets in settlement of her capital partner for $50,000 a one-third interest in a partner Assuming that the income-sharin ship. What effect does this transaction have on part respectively, how much of Riley's nership net assets? Pester's capital account? *19. Jerry Park decides to invest $25,000 in a partnership *23. Your roommate argues that partn for a one-sixth capital interest. How much to the be revalued in situations like th partnership's net assets increase? Does Park also acquire Why is this generally not done? * 24. How is a deceased partner's equ a one-sixth income ratio through this investment? BRIEF EXERCISES BE12-1 Barbara Ripley and Fred Nichols decide to organize the ALL-Star partnership. Ja Ripley invests $15,000 cash, and Nichols contributes $10,000 cash and equipment having a a book value of $3,500. Prepare the entry to record Nichols's investment in the partner- ship, assuming the equipment has a fair value of $4,000. BE12-2 Penner and Torres decide to merge their proprietorships into a partnership called Pentor Company. The balance sheet of Torres Co. shows: Accounts receivable $16,000