I checked the textbook solutions and they don't make any sense. If Ho is selling her interest, shouldn't it be at $35k, per her equity? Also if it's a personal transaction why is it being recorded and giving her book equity? I'm wrong and not sure why. The solutions debit Ho's Capital 5 times and the balance sheet definitely doesn't feel balanced. It feels like a messily worded problem. Help.
L P12-27A Accounting for withdrawal of a partner Ho-Kim-Ling Oriental Design is a partnership owned by three individuals. The part- ners share profits and losses in the ratio of 30% to Ho, 40% to Kim, and 30% to Ling. At December 31, 2018, the firm has the following balance sheet. On December 31, Ho withdraws from the partnership. HO-KIM-LING ORIENTAL DESIGN Balance Sheet December 31, 2018 Assets Liabilities Cash Accounts Payable $ 87,000 Accounts Receivable, Net Merchandise Inventory Equipment, Net $ 10,000 12,000 94,000 95,000 35,000 Partners' Equity Ho, Capital Kim, Capital Ling, Capital Total Partners' Equity Total Liabilities and Partners' Equity 47,000 42,000 124,000 $ 211,000 Total Assets $ 211,000 Requirements Record Ho's withdrawal from the partnership under the following independent plans: 1. In a personal transaction, Ho sells her equity to Wei, who pays Ho $120,000 for her interest. Kim and Ling agree to accept Wei as a partner. 2. The partnership pays Ho cash of $10,000 and gives her a note payable for the remainder of her book equity in settlement of her partnership interest. 3. The partnership pays Ho $65,000 for her book equity. 4. The partnership pays Ho $25,000 for her book equity. L P12-27A Accounting for withdrawal of a partner Ho-Kim-Ling Oriental Design is a partnership owned by three individuals. The part- ners share profits and losses in the ratio of 30% to Ho, 40% to Kim, and 30% to Ling. At December 31, 2018, the firm has the following balance sheet. On December 31, Ho withdraws from the partnership. HO-KIM-LING ORIENTAL DESIGN Balance Sheet December 31, 2018 Assets Liabilities Cash Accounts Payable $ 87,000 Accounts Receivable, Net Merchandise Inventory Equipment, Net $ 10,000 12,000 94,000 95,000 35,000 Partners' Equity Ho, Capital Kim, Capital Ling, Capital Total Partners' Equity Total Liabilities and Partners' Equity 47,000 42,000 124,000 $ 211,000 Total Assets $ 211,000 Requirements Record Ho's withdrawal from the partnership under the following independent plans: 1. In a personal transaction, Ho sells her equity to Wei, who pays Ho $120,000 for her interest. Kim and Ling agree to accept Wei as a partner. 2. The partnership pays Ho cash of $10,000 and gives her a note payable for the remainder of her book equity in settlement of her partnership interest. 3. The partnership pays Ho $65,000 for her book equity. 4. The partnership pays Ho $25,000 for her book equity
