required information problem 12 - 5a (algo) partner withdrawal and admission lo p3, p4 the following…

required information problem 12 - 5a (algo) partner withdrawal and admission lo p3, p4 the following information applies to the questions displayed below. meir, benson, and lau are partners and share income and loss in a 2:3:5 ratio (in percents: meir, 20%; benson, 30%; and lau, 50%). the partnerships capital balances are as follows: meir, $48,000; benson, $74,000; and lau, $128,000. benson decides to withdraw from the partnership. problem 12 - 5a (algo) part 1 1. prepare the journal entry to record bensons withdrawal under each independent assumptions. note: do not round intermediate calculations. (a) benson sells her interest to north for $160,000 after north is approved as a partner; (b) benson gives her interest to a son - in - law, schmidt, and schmidt is approved as a partner; (c) benson is paid $74,000 in partnership cash for her equity; (d) benson is paid $112,000 in partnership cash for her equity. view transaction list journal entry worksheet 1 2 3 4 record the withdrawal if benson sells her interest to north for $160,000 after north is approved as a partner.

required information problem 12 - 5a (algo) partner withdrawal and admission lo p3, p4 the following information applies to the questions displayed below. meir, benson, and lau are partners and share income and loss in a 2:3:5 ratio (in percents: meir, 20%; benson, 30%; and lau, 50%). the partnerships capital balances are as follows: meir, $48,000; benson, $74,000; and lau, $128,000. benson decides to withdraw from the partnership. problem 12 - 5a (algo) part 1 1. prepare the journal entry to record bensons withdrawal under each independent assumptions. note: do not round intermediate calculations. (a) benson sells her interest to north for $160,000 after north is approved as a partner; (b) benson gives her interest to a son - in - law, schmidt, and schmidt is approved as a partner; (c) benson is paid $74,000 in partnership cash for her equity; (d) benson is paid $112,000 in partnership cash for her equity. view transaction list journal entry worksheet 1 2 3 4 record the withdrawal if benson sells her interest to north for $160,000 after north is approved as a partner.

Answer

Explanation:

Step1: Identify the partner's capital balance

Benson's capital balance is $74,000.

Step2: Analyze case (a) - Sale to North

When Benson sells her interest to North for $160,000, the partnership's capital structure changes in terms of the partner - not the total capital of the partnership. The journal entry will transfer Benson's capital to North's capital. Debit Benson, Capital $74,000 Credit North, Capital $74,000

Step3: Analyze case (b) - Transfer to Schmidt

When Benson gives her interest to Schmidt, the journal entry will transfer Benson's capital to Schmidt's capital. Debit Benson, Capital $74,000 Credit Schmidt, Capital $74,000

Step4: Analyze case (c) - Payment in cash equal to capital balance

When Benson is paid $74,000 in partnership cash for her equity, the journal entry will reduce the partnership's cash and Benson's capital. Debit Benson, Capital $74,000 Credit Cash $74,000

Step5: Analyze case (d) - Payment in cash more than capital balance

When Benson is paid $112,000 in partnership cash for her $74,000 equity, the excess payment may be treated as a bonus to Benson. The journal entry will reduce the partnership's cash and Benson's capital, with the difference debited to the remaining partners' capital accounts in their profit - sharing ratio. First, calculate the bonus amount: $112,000 - 74,000=38,000$ Meir's share of the bonus reduction: $38,000\times\frac{2}{2 + 5}=\frac{76,000}{7}\approx10,857.14$ Lau's share of the bonus reduction: $38,000\times\frac{5}{2+5}=\frac{190,000}{7}\approx27,142.86$ Debit Benson, Capital $74,000 Debit Meir, Capital $10,857.14 Debit Lau, Capital $27,142.86 Credit Cash $112,000

Answer:

Case (a): Debit: Benson, Capital $74,000 Credit: North, Capital $74,000 Case (b): Debit: Benson, Capital $74,000 Credit: Schmidt, Capital $74,000 Case (c): Debit: Benson, Capital $74,000 Credit: Cash $74,000 Case (d): Debit: Benson, Capital $74,000 Debit: Meir, Capital $10,857.14 Debit: Lau, Capital $27,142.86 Credit: Cash $112,000