On December 31, the capital balances and income ratios in Sunland Company are as follows.Partner Capital Balance Income RatioTrayer $ 64,500 50% Emig 35,000 30% Posada 34,500 20%(1) Each of the continuing partners agrees to pay $ 19,600 in cash from personal funds to purchase Posada’s ownership equity. Each receives 50% of Posada’s equity.(2) Emig agrees to purchase Posada’s ownership interest for $ 24,200 cash.(3) Posada is paid $ 37,700 from partnership assets, which includes a bonus to the retiring partner.(4) Posada is paid $ 25,780 from partnership assets, and bonuses to the remaining partners are recognized.Journalize the withdrawal of Posada under each of the following assumptions. If Emig’s capital balance after Posada’s withdrawal is $ 38,930, what were (1) the total bonus to the remaining partners and (2) the cash paid by the partnership to Posada?

Journal entries are the initial recording of all the monetary business transactions in a…

Answered: nce Income Ratio Trayer $ 64,500…

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 December 31, the capital balances and income ratios in Sunland Company are as follows.

Partner	Capital Balance	Income Ratio
Trayer	$ 64,500		50%
Emig	35,000		30%
Posada	34,500		20%

(1)		Each of the continuing partners agrees to pay $ 19,600 in cash from personal funds to purchase Posada’s ownership equity. Each receives 50% of Posada’s equity.
(2)		Emig agrees to purchase Posada’s ownership interest for $ 24,200 cash.
(3)		Posada is paid $ 37,700 from partnership assets, which includes a bonus to the retiring partner.
(4)		Posada is paid $ 25,780 from partnership assets, and bonuses to the remaining partners are recognized.

Journalize the withdrawal of Posada under each of the following assumptions.

If Emig’s capital balance after Posada’s withdrawal is $ 38,930, what were (1) the total bonus to the remaining partners and (2) the cash paid by the partnership to Posada?

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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