Fundamental Accounting Principles 22th Edition by John Wild ,Ken Shaw,Barbara Chiappetta

Exercise 11

Part 1. Meir, Benson, and Lau are partners and share income and loss in a 3:2:5 ratio. The partnership's capital balances are as follows: Meir, $168,000; Benson, $138,000; and Lau, $294,000. Benson decides to withdraw from the partnership, and the partners agree not to have the assets revalued upon Benson's retirement. Prepare journal entries to record Benson's February 1 withdrawal from the partnership under each of the following separate assumptions: Benson ( a ) sells her interest to North for $160,000 after Meir and Lau approve the entry of North as a partner; ( b ) gives her interest to a son-in-law, Schmidt, and thereafter Meir and Lau accept Schmidt as a partner; ( c ) is paid $138,000 in partnership cash for her equity; ( d ) is paid $214,000 in partnership cash for her equity; and ( e ) is paid $30,000 in partnership cash plus equipment recorded on the partnership books at $70,000 less its accumulated depreciation of $23,200.
Part 2. Assume that Benson does not retire from the partnership described in part 1. Instead, Rhode is admitted to the partnership on February 1 with a 25% equity. Prepare journal entries to record Rhode's entry into the partnership under each of the following separate assumptions: Rhode invests ( a ) $200,000; ( b ) $145,000; and ( c ) $262,000.