Problem - Partner withdrawal and admission
Meir, Benson, and Lau are partners and share income and loss in a 3:2:5 ratio. The partnership's capital balances are as follows: Meir, $168,000; Benson, $138,000; and Lau, $294,000. Benson decides to withdraw from the partnership, and the partners agree to not have the assets revalued upon Benson's retirement.
Requirement 1: Prepare journal entries to record Benson's February 1 withdrawal from the partnership under each of the following separate assumptions (Round your answers to the nearest dollar amount. Omit the "$" sign in your response):
(a) Benson sells his interest to North for $160,000 after Meir and Lau approve the entry of North as a partner
(b) Benson gives his interest to a son-in-law, Schmidt, and thereafter Meir and Lau accept Schmidt as a partner
(c) Benson is paid $138,000 in partnership cash for his equity
(d) Benson is paid $214,000 in partnership cash for his equity
(e) Benson is paid $30,000 in partnership cash plus equipment recorded on the partnership books at $70,000 less its accumulated depreciation of $23,200
Requirement 2: Assume that Benson does not retire from the partnership described in Requirement 1. Instead, Rhodes is admitted to the partnership on February 1 with a 25% equity. Prepare journal entries to record Rhodes's entry into the partnership under each of the following separate assumptions (Round your answer to the nearest dollar amount. Omit the "$" sign in your response):
(a) Rhodes invests $200,000
(b) Rhodes invests $145,000
(c) Rhodes invests $262,000