Question
E12.11 (LO 6) AP Julie Lane, Sara Miles, and Amber Noll have capital balances of $50,000, $40,000, and $30,000, respectively. The profit and loss ratio
E12.11 (LO 6) AP Julie Lane, Sara Miles, and Amber Noll have capital balances of $50,000, $40,000, and $30,000, respectively. The profit and loss ratio is 5:3:2.
Assume Noll withdraws from the partnership on December 31 of the current year under each of the following independent conditions:
Record withdrawal of partner.
1. Miles agrees to purchase all of Noll's equity by paying $35,000 cash from her personal assets.
2. Noll withdraws $30,000 cash from the partnership.
3. Noll withdraws $35,000 cash from the partnership.
Instructions
a. Journalize the withdrawal of Noll under each of the above assumptions.
b. Determine the balances in the partners' capital accounts and in total partners' equity after Noll has withdrawn, for conditions 1 and 3 above.
Solution:-
A.
| Date | account | Debit | Credit |
1 | 31- Dec | Noll capital A/C | $30000 |
|
|
| Miles capital A/C |
| $30000 |
|
| (To record withdrawal of partner) |
|
|
|
|
|
|
|
2 | 31- Dec | Noll capital A/C | $30000 |
|
|
| cash |
| $30000 |
|
| (To record withdrawal of partner) |
|
|
|
|
|
|
|
3 | 31- Dec | Noll capital A/C | $30000 |
|
|
| Julie capital A/C | $3125 |
|
|
| Miles capital A/C | $1875 |
|
|
| cash |
| $35000 |
|
| (To record withdrawal of partner) |
|
|
b.
The balances in the partners' capital accounts
Condition 1 :-
Miles capital balance $70000
Julie capital balance $50000
Condition 3 :-
Miles capital balance $38125
Julie capital balance $4
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started