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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 $ 143,550 186,450 170,000 Profit and Loss Percentage 30% 50 20 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. 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. 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. 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.)

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 $ 143,550 186,450 170,000 Profit and Loss Percentage 30% 50 20 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. 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. 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. 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.)

FINANCIAL ACCOUNTING
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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vi.6

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 >
Transcribed Image Text: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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