Cummings and Stickel Construction Company, a partnership, is operating a general contracting business. Ownership of the company is divided among the partners, Katie Cummings, Julie Stickel, Roy Hewson, and Patricia Weber. Profits and losses are shared equally. The books are kept on the calendar-year basis. On August 10, after the business had been in operation for several years, Patricia Weber passed away. Mr. Weber wished to sell his wife’s interest for $30,000. After the books were closed, the partners’ capital accounts had credit balances as follows: Katie Cummings $90,000 Julie Stickel 60,000 Roy Hewson 50,000 Patricia Weber 40,000 Required: 1. Prepare the general journal entry required to enter the check issued to Mr. Weber in payment of his deceased wife’s interest in the partnership. According to the partnership agreement, the difference between the amount paid to Mr. Weber and the book value of Patricia Weber’s capital account is allocated to the remaining partners based on their ending capital account balances. 2. Assume instead that Mr. Weber is paid $60,000 for the book value of Patricia Weber’s capital account. Prepare the necessary journal entry. 3. Assume instead that Julie Stickel (with the consent of the remaining partners) purchased Weber’s interest for $70,000 and gave Mr. Weber a personal check for that amount. Prepare the general journal entry for the partnership only.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Cummings and Stickel Construction Company, a partnership, is operating a general contracting business. Ownership of the company is divided among the partners, Katie Cummings, Julie Stickel, Roy Hewson, and Patricia Weber. Profits and losses are shared equally. The books are kept on the calendar-year basis.

On August 10, after the business had been in operation for several years, Patricia Weber passed away. Mr. Weber wished to sell his wife’s interest for $30,000. After the books were closed, the partners’ capital accounts had credit balances as follows:

Katie Cummings	$90,000
Julie Stickel	60,000
Roy Hewson	50,000
Patricia Weber	40,000

Required:

1.	Prepare the general journal entry required to enter the check issued to Mr. Weber in payment of his deceased wife’s interest in the partnership. According to the partnership agreement, the difference between the amount paid to Mr. Weber and the book value of Patricia Weber’s capital account is allocated to the remaining partners based on their ending capital account balances.
2.	Assume instead that Mr. Weber is paid $60,000 for the book value of Patricia Weber’s capital account. Prepare the necessary journal entry.
3.	Assume instead that Julie Stickel (with the consent of the remaining partners) purchased Weber’s interest for $70,000 and gave Mr. Weber a personal check for that amount. Prepare the general journal entry for the partnership only.

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