Glen Otis is to retire from the partnership of Otis and Associates as of March 31, the end of the current fiscal year. After closing the accounts, the capital balances of the partners are as follows: Glen Otis $ 200,000; Tammie Sawyer, $125,000; and Joe Parrot, $140,000. They have shared net income and net losses in the ratio 3:2:2. The partners agree that the merchandise inventory should be increased by $15,00, and the allowance for doubtful accounts should be increased by $3,100. Otis agrees to accept a note of $150,000 in partial settlement of his ownership equity. the remainder of his claims is to be paid in cash. Sawyer and Parrot ate to share equally in the net income or net loss of the new partnership. Journalize the entries to record (a) the adjustment of the assets to bring them into agreement with current market prices and (b) the withdrawal of Otis from the partnership.
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is 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, drawings of a partner, etc.
Glen Otis is to retire from the
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Journalize the entries to record (a) the adjustment of the assets to bring them into agreement with current market prices and (b) the withdrawal of Otis from the partnership.
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why did you subtract the 3100 from the 15000? Should that have been 15000 + 3100? Why is it 3/7 and 2/7? Where did the 7 come from?
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