Question

Brenda Roberts, Lacy Peters, and Aarin MacDonald are partners in RPM Dance Studios. They share profit and losses in a 40:40:20 ratio. Aarin retires from the partnership on October 14, 2020, and receives $95,000 cash plus a car with a book value of $55,000 (original cost was $114,000).

Required:
For each of the following unrelated situations, present the journal entry to record Aarin’s retirement assuming the equities of the partnership on October 14 are:

a. Roberts, $315,000; Peters, $415,000; MacDonald, $150,000.

B.Roberts, $115,000; Peters, $150,000; MacDonald; $175,000.

c. Roberts, $145,000; Peters, $175,000; MacDonald; $75,000.

Answer 1

Answer:

1.)

Date	Particulars	Debit ($)	Credit ($)
Oct 14	Asrian macDonald's capital	150000
	Cash		95000
	Car-Equipmentt		55000

2.)
In this case partner is paid 150000 (95000+55000), His equity is 175000
Remaining amount is contributed by partner in their profit sharing ratio

Date	Particulars	Debit ($)	Credit ($)
Oct 14	Asrian macDonald's capital	150000
	Cash		95000
	Car-Equipment		55000
	Branda robert's capital (25000*40/(40+40))		12500
	Lacy peter's capital		12500

3.)
In this case partner is paid 150000 (95000+55000), His equity is 75000
Remaining amount is contributed by partner in their profit sharing ratio

Date	Particulars	Debit ($)	Credit ($)
Oct 14	Asrian macDonald's capital	75000
	Branda roberts capital (75000*40(40/40))	37500
	Lacy peter's capital	37500
	Cash		95000
	Car-Equipment		55000