Ask Question
17 June, 12:25

Lopez, Cruz, and Perez are partners and share net income and loss in a 6:4:1 ratio. On December 31, Perez withdraws from the partnership when the equities of the partners are: Lopez, $3,000; Cruz, $1,800; and Perez, $1,200. Prepare journal entries to record Perez's withdrawal under each of the following separate situations: Perez is paid for her equity using partnership cash of (1) $1,200; (2) $1,600; and (3) $700.

+4
Answers (1)
  1. 17 June, 15:36
    0
    Journal entries per situation:

    (1) partnership cash of $1.200:

    Credit - > 1.200 Cash

    Debit - > 1.200 Equity

    (2) partnership cash of $1.600:

    Credit - > 1.600 Cash

    Debit - > 1.200 Equity + 400 Losses on equity

    (1) partnership cash of $700:

    Credit - > 1.200 Cash + 500 Other income on equity

    Debit - > 1.200 Equity

    Explanation:

    In order to compensate the Balance Sheet, is necessary to record additional losses when the payment for the equity is higher than the current value (case 2), or additional income when is lower than the current value (case 3).
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Lopez, Cruz, and Perez are partners and share net income and loss in a 6:4:1 ratio. On December 31, Perez withdraws from the partnership ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers