Question
Question 4 (10 Marks) The balance sheet of the partnership of Ray, John and Tracy is presented below. They share net income and losses equally.
Question 4 (10 Marks)
The balance sheet of the partnership of Ray, John and Tracy is presented below. They
share net income and losses equally.
RCT Partnership
Balance Sheet
Cash $ 5,000 Accounts payable $10,000
Inventory 80,000 Ray, Capital 20,000
John, Capital 40,000
_ Tracy, Capital 15,000
Total $ 85,000 Total $85,000
Required:
Prepare all necessary journal entries for each of the following independent situations.
1. R, J and T agree to admit W. W purchases one-half of the equity interest of John and pays John $20,000 cash personally.
2. R, J and T agree to admit W to a one-half equity interest in the partnership if she invests $45,000 cash into the partnership. Refer to the original data.
3. John wishes to retire. The partnership will pay John $30,000 for his equity.
John really wants to retire. Refer to the original data.
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