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Prepare the necessary journal entries needed

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Reference no: EM133000721

The partnership of A, J and S has been in business for 25 years. On December 31, 2016, S decided to retire from the partnership. The partnership reported the following capital balances for each partner at December 31, 2016.

A, Capital 150,000
J, Capital 200,000
S, Capital 120,000

The partners allocate partnership income and loss in the ratio of 20:30:50 for A, J and S respectively.

Required:

Problem 1: Prepare the necessary journal entries needed under each of the following independent situations:

a. S capital interest was acquired for 150,000 by J in a personal transaction. Partnership assets were not revalued, and partnership goodwill was not recognized.
b. Assume the same facts as in (a) above except that the partnership goodwill applicable to the entire business was recognized by the partnership.
c. S was given 60,000 of cash and partnership land with a fair value of 120,000. The carrying amount of the land on the partnership books was 100,000. Capital of the partnership after S retirement was 310,000. (Hint. Record the valuation of the land first then proceed with withdrawal)
d. S was given 180,000 of partnership cash upon retirement.
e. S was given 100,000 of partnership cash upon retirement. Amount of difference is unassignable in any specific assets.

Reference no: EM133000721

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