Prepare the journal entries to record retirement of williams

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Reference no: EM132719794

Retirement of a partner

The 1 July 2003 statement of financial position of W-X-L Catering is shown below:

Weston, Ward and Williams share profits and losses in the ratio of 6:5:4. Williams decides to retire from the partnership on 1 July 2003.

Required:

Question 1: Prepare the journal entries to record the retirement of Williams under each of the following independent assumptions:

1. Weston purchases Williams's interest for $111 000.

2. Williams sells one-third of his interest to Weston for $37 500 and two-thirds to Ward for $57 000.

3. Appraisals reveal that accounts receivable are overstated by $6000, inventory under- stated by $7500 and equipment is understated by $15 000. These assets are revalued, and Williams is given a promissory note equal to his revised capital account to cover his retirement.

4. The partnership gives Williams $37 500 cash and plant valued at $67 500 for his partnership interest.

5. The partnership gives Williams $60 000 cash.

6. Williams receives $60 000 cash and a $30 000 promissory note from the partnership for his interest.

Reference no: EM132719794

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