Concept Introduction:
Admission and Withdrawal of Partner
When a new partner is admitted to the existing
When a partner leaves a partnership firm then it is called withdrawal of the partner, He may be permitted to withdraw assets either equal to or less than his share from the firm.
Requirement 1-
To prepare:
Journal entries to record Benson’s withdrawal.

Answer to Problem 4APSA
Solution:
S. No. | Accounts titles and Description | Debit ($) | Credit ($) |
1 | B's Capital | 160,000 | |
N's Capital | 160,000 | ||
(To record the sale of Interest of B to N) | |||
2 | B's Capital | 138,000 | |
S's Capital | 138,000 | ||
(To record the B's Interest to S) | |||
3 | B's Capital | 138,000 | |
Cash | 138,000 | ||
(To record withdrawal of B) | |||
4 | B's Capital | 138,000 | |
M's Capital | 28,500 | ||
L's Capital | 47,500 | ||
Cash | 214,000 | ||
(To record withdrawal of B with bonus) | |||
5 | B's Capital | 138,000 | |
23,200 | |||
M's Capital | 22,950 | ||
L's Capital | 38,250 | ||
Equipment | 70,000 | ||
Cash | 30,000 | ||
(To record the withdrawal of B with bonus to old partners) |
Explanation of Solution
Entry 1- Benson sells her interest to North worth $160,000.
In this entry, Benson had sold her interest so her capital account will be debited with $160,000. And North is new partner in the partnership firm so his capital will be added in partnership, thus, his capital account will be credited.
Entry 2 Benson gives her interest to son-in law Schmidt.
In this entry, Benson gives her interest so her capital will be debited with $138,000. And Schmidt is new partner in the partnership firm so his capital will be added in partnership, thus, his capital account will be credited.
Entry 3 Benson is paid in cash.
In this entry, Benson is paid her share in cash so her capital will be debited with $138,000 and cash will be credited.
Entry 4 Benson is paid in cash with bonus.
In this entry Benson is paid her share along with bonus in cash. So in this case her share amount i.e. $138,000 will be debited with her capital account and remaining amount i.e. $78,000 ($216,000-$138,000) will be taken from other partner’s capital in their profit sharing ratio.
Amount to be withdrawal from other partner’s capital is calculated as follows-
M’s capital-
L’s Capital-
Entry 5 Benson is paid in cash with bonus to other partners.
In this entry Benson is paid her share in cash along with equipment. So in this case her share amount i.e. $138,000 will be debited with her capital account and equipment will also be debited.
Given:
B’s Capital Account - $138,000
Accumulated Depreciation Equipment - $23,200
Equipment - $70,000
Cash - $30,000
Bonus to other partners is calculated as follows-
M’s Capital-
L’s Capital-
Requirement 2-
To prepare:

Answer to Problem 4APSA
Solution:
S. No. | Accounts titles and Description | Debit ($) | Credit ($) |
1 | Cash | 200,000 | |
R's Capital | 200,000 | ||
(To record admission of partner R) | |||
2 | Cash | 145,000 | |
M's Capital | 12,375 | ||
B's Capital | 8,250 | ||
L's Capital | 20,625 | ||
R Capital | 186,250 | ||
(To record R's admission and Bonus) | |||
3 | Cash | 262,000 | |
M's Capital | 13,950 | ||
B's Capital | 9,300 | ||
L's Capital | 23,250 | ||
R Capital | 215,500 | ||
(To record R's admission and Bonus to old) |
Explanation of Solution
Entry 1- Rhode invests $200,000.
Rhode is new partner in the partnership firm so his capital will be added in partnership, thus, his capital account will be credited, and cash will be debited.
Entry 2- Rhode invests $145,000.
Rhode is new partner in the partnership firm so his capital will be added in partnership, thus, his capital account will be credited with $186,250.
Remaining amount is bonus part which will be taken from old partners in their profit sharing ratio.
Remaining amount = ($186,250 - $145,000) = $41,250
Calculation of bonus from other partners-
Entry 3- Rhode invests $262,000.
Rhode is new partner in the partnership firm so his capital will be added in partnership, thus, his capital account will be credited with $215,500.
Remaining amount is bonus part which will be given to old partners in their profit sharing ratio.
Remaining amount = ($262,000 - $215,500) = $46,500
Calculation of bonus to other partners-
Thus, other partners receive Bonus.
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