The following balances as at October 21, 2016 for the Partnership of KATHY, LILIA, and MINDA were as follows: Cash 50,000 Lilia, Loan 15,000 Non-cash assets 400,000 Totals 465,000 Liabilities 15,000 Kathy, loan 22,500 Kathy, capital 105,000 Lilia, capital 97,500 Minda, capital 225,000 Totals 465,000 KATHY has decided to retire from the partnership on October 31. Partners agreed to adjust the non-cash assets to their fair market value of 490,000. The estimated profit to October 31 is 100,000. KATHY will be paid 173,000 for her partnership interest inclusive of her loan which is repaid in full. Their profit and loss ratio is 3:3:4 to KATHY, LILIA, and MINDA, respectively. Required: 1. Prepare entries for the retirement of KATHY from the partnership. 2. What will be the balance of LILIA capital account after the retirement of KATHY?
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
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