Journalize the revaluation of the noncash assets

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Accounting for withdrawal of a partner

The O'Hara and Parks partnership balance sheet reports capital of $55,000 for O'Hara and $110,000 for Parks. O'Hara is withdrawing from the firm. The partners agree to write partnership noncash assets to market value by increasing them $40,000. They have shared profits and losses in the ratio of 1/4 to O'Hara and 3/4 to Parks. The partnership agreement states that a withdrawing partner will receive assets equal to the book value of his owner's equity.

Requirements

1. Journalize the revaluation of the noncash assets.

2. Journalize the withdrawal of O'Hara.

3. Parks will continue to operate the business as a proprietorship. What is Parks' beginning capital on the books of his new proprietorship?

Reference no: EM13527411

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