The partnership of Matteson, Richton, and O'Toole has existed for a number of years. At the present time, the partners have thefollowing capital balances and profit and loss sharing percentages:PartnerMattesonRichtonO'TooleCapitalBalance$ 143,550O'Toole elects to withdraw from the partnership, leaving Matteson and Richton to operate the business. Following the originalpartnership agreement, when a partner withdraws, the partnership and all of its individual assets are to be reassessed to current fairvalues by an independent appraiser. The withdrawing partner will receive cash or other assets equal to that partner's current capitalbalance after including an appropriate share of any adjustment indicated by the appraisal. Gains and losses indicated by the appraisalare allocated using the regular profit and loss percentages.186,450170,000An independent appraiser is hired and estimates that the partnership as a whole is worth $530,000. Regarding the individual assets,the appraiser finds that a building with a book value of $250,000 has a fair value of $360,000. The book values for all otheridentifiable assets and liabilities are the same as their appraised fair values.View transaction listAccordingly, the partnership agrees to pay O'Toole $260,000 upon withdrawal. Matteson and Richton, however, do not wish to recordany goodwill in connection with the change in ownership.1Prepare the journal entry to record O'Toole's withdrawal from the partnership. (If no entry is required for a transaction/event, select"No journal entry required" in the first account field. Do not round your intermediate calculations.)Profit andLossPercentage30%5020Journal entry worksheetTransaction12Note: Enter debits before credits.Record the building appreciation to old partners.Record entryGeneral JournalClear entryDebitCreditView general journalView transaction listJournal entry worksheet< 1 2Record O'Toole's withdrawal from the partnership.Note: Enter debits before credits.Transaction2Record entryGeneral JournalClear entryDebitCreditView general journal>

General JournalAccounts & ExplanationDebit ($)Credit ($)Building110,000Matteson's…

Answered: ndraw from the partnership, le nt, when…

ndraw from the partnership, le nt, when a partner withdraws ndent appraiser. The withdraw ng an appropriate share of an he regular profit and loss per

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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Question

The partnership of Matteson, Richton, and O'Toole has existed for a number of years. At the present time, the partners have the
following capital balances and profit and loss sharing percentages:
Partner
Matteson
Richton
O'Toole
Capital
Balance
$ 143,550
O'Toole elects to withdraw from the partnership, leaving Matteson and Richton to operate the business. Following the original
partnership agreement, when a partner withdraws, the partnership and all of its individual assets are to be reassessed to current fair
values by an independent appraiser. The withdrawing partner will receive cash or other assets equal to that partner's current capital
balance after including an appropriate share of any adjustment indicated by the appraisal. Gains and losses indicated by the appraisal
are allocated using the regular profit and loss percentages.
186,450
170,000
An independent appraiser is hired and estimates that the partnership as a whole is worth $530,000. Regarding the individual assets,
the appraiser finds that a building with a book value of $250,000 has a fair value of $360,000. The book values for all other
identifiable assets and liabilities are the same as their appraised fair values.
View transaction list
Accordingly, the partnership agrees to pay O'Toole $260,000 upon withdrawal. Matteson and Richton, however, do not wish to record
any goodwill in connection with the change in ownership.
1
Prepare the journal entry to record O'Toole's withdrawal from the partnership. (If no entry is required for a transaction/event, select
"No journal entry required" in the first account field. Do not round your intermediate calculations.)
Profit and
Loss
Percentage
30%
50
20
Journal entry worksheet
Transaction
1
2
Note: Enter debits before credits.
Record the building appreciation to old partners.
Record entry
General Journal
Clear entry
Debit
Credit
View general journal
View transaction list
Journal entry worksheet
< 1 2
Record O'Toole's withdrawal from the partnership.
Note: Enter debits before credits.
Transaction
2
Record entry
General Journal
Clear entry
Debit
Credit
View general journal
>

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