On July 1, 2019, Lola wants to retire from JKL Partnership. The Statement of Financial Position of JKL Partnership before closing on that date shows the following: Cash148,000Receivables, net72,000Equipment, net270,000Prepaid expenses60,000 Total assets 550,000Liabilities90,000Jose, Capital200,000Kiko, Capital96,000Lola, Capital84,000Income summary80,000 Total liabilities and equity 550,000 Jose, Kiko and Lola share profits and losses in the ratio 5:3:2, respectively. The partners agreed to write-off the prepaid expenses and to adjust the equipment to its fair value of 230,000. Lola is paid 110,000 cash for his total interest. What is the balance of each remaining partner’s account after Lola’s retirement?

Old ratio=5:3:2 New ratio=5:3 Gaining Ratio of Jose=New Ratio-Old Ratio=58-510=1080 Gaining Ratio of…

Answered: Jose, Kiko and Lola share profits and…

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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On July 1, 2019, Lola wants to retire from JKL Partnership. The Statement of Financial Position of JKL Partnership before closing on that date shows the following:

Cash	148,000
Receivables, net	72,000
Equipment, net	270,000
Prepaid expenses	60,000
Total assets	550,000
Liabilities	90,000
Jose, Capital	200,000
Kiko, Capital	96,000
Lola, Capital	84,000
Income summary	80,000
Total liabilities and equity	550,000

Jose, Kiko and Lola share profits and losses in the ratio 5:3:2, respectively. The partners agreed to write-off the prepaid expenses and to adjust the equipment to its fair value of 230,000. Lola is paid 110,000 cash for his total interest. What is the balance of each remaining partner’s account after Lola’s retirement?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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