Custom Bundle: Accounting, Loose-leaf Version, 26th + Working Papers, Chapters 1-17, 26th Edition
Custom Bundle: Accounting, Loose-leaf Version, 26th + Working Papers, Chapters 1-17, 26th Edition
26th Edition
ISBN: 9781305714731
Author: Warren/Reeve/Duchac
Publisher: Cengage
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Chapter 12, Problem 12.17EX

a.

To determine

Partnership

It is that form of organization which is owned and managed by two or more persons who invest and share the profits and losses according to a pre-determined ratio.

To record:  The journal entry for the asset revaluation.

b.

To determine

To provide: The journal entry of withdrawal of partner JM from the partnership.

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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.
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Custom Bundle: Accounting, Loose-leaf Version, 26th + Working Papers, Chapters 1-17, 26th Edition

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