Question
Wright, Bell, and Edison are partners and share income in a 2:5:3 ratio. The partnership's capital balances are as follows: Wright $33,000, Bell $27,000, and
Wright, Bell, and Edison are partners and share income in a 2:5:3 ratio. The partnership's capital balances are as follows: Wright $33,000, Bell $27,000, and Edison $40,000. Edison decides to withdraw from the partnership, and the partners agree not to revalue the assets upon Edison's retirement. The journal entry to record Edison's June 1 withdrawal from the partnership if Edison sells his interest to Whitney for $45,000 after the two partners approve Whitney as partner is:
Debit Edison, Capital $45,000; credit Whitney, Capital $45,000 | ||
Debit Edison, Capital $40,000; credit Cash $40,000. | ||
Debit Edison, Capital $40,000; debit Wright, Capital $2,500; debit Bell, Capital $2,500; credit Whitney, Capital $45,000 | ||
Debit Edison, Capital $40,000; credit Whitney, Capital $40,000 | ||
Debit Edison, Capital $40,000; debit Cash $5,000; credit Whitney, Capital $45,000 |
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