On December 31, the capital balances and income ratios in TEP Company are as follows.
|
Partner |
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Income Ratio |
|
Brayer |
$60,000 |
50% |
|
Emig |
40,000 |
30% |
|
Posada |
30,000 |
20% |
Instructions
(a)Journalize the withdrawal of Posada under each of the following assumptions.
(1)Each of the continuing partners agrees to pay $18,000 in cash from personal funds to purchase Posada”s ownership equity. Each receives 50% of Posada”s equity.
(2)Emig agrees to purchase Posada”s ownership interest for $25,000 cash.
(3)Posada is paid $34,000 from partnership assets, which includes a bonus to the retiring partner.
(4)Posada is paid $22,000 from partnership assets, and bonuses to the remaining partners are recognized.
(b)If Emig”s capital balance after Posada”s withdrawal is $43,600, what were (1) the total bonus to the remaining partners and (2) the cash paid by the partnership to Posada?
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