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    Death or Retirement of a Partner

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    PARTNERSHIP ACCOUNTS
    CHANGE IN THE PARTNERSHIP
    RETIREMENT OF A PARTNER
    QUESTION
    A summary balance sheet for the Singh, Deonarine, and Maharaj partnership on December 31, 2011 is shown below. Partners Singh, Deonarine, and Maharaj allocate profit and loss in their respective ratios of 3:2:1. The partnership agreed to pay partner Deonarine $500,000 for his partnership interest upon his retirement from the partnership on January 1, 2012. The partnership financials on January 1, 2012 are:

    Assets
    Cash $ 70,000
    Marketable securities 190,000
    Inventory 360,000
    Land 110,000
    Building-net 570,000
    Total assets $1,300,000

    Equities
    Singh, capital $630,000
    Deonarine, capital 420,000
    Maharaj, capital 250,000
    Total equities $1,300,000

    Required:
    Prepare the journal entry to reflect Deonarine's retirement from the partnership:

    1. Assuming a bonus to Deonarine. 7 marks

    2. Assuming a revaluation of total partnership capital based on excess payment. 10 marks

    3. Assuming goodwill equal to the excess payment is recorded. 8 marks

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    https://brainmass.com/business/changes-in-partners/death-retirement-partner-612267

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    PARTNERSHIP ACCOUNTS
    CHANGE IN THE PARTNERSHIP
    RETIREMENT OF A PARTNER
    QUESTION
    A summary balance sheet for the Singh, Deonarine, and Maharaj partnership on December 31, 2011 is shown below. Partners Singh, Deonarine, and Maharaj allocate profit and loss in ...

    Solution Summary

    Partnership accounting - Three different ways that partnerships account for the death or retirement of a partner.

    $2.19

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