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24 March, 11:59

Withdrawal of Partner Lane Stevens is to retire from the partnership of Stevens and Associates as of March 31, the end of the current fiscal year. After closing the accounts, the capital balances of the partners are as follows: Lane Stevens, $150,000; Cherie Ford, $70,000; and LaMarcus Rollins, $60,000. They have shared net income and net losses in the ratio of 3:2:2. The partners agree that the merchandise inventory should be increased by $22,300 and the allowance for doubtful accounts should be increased by $1,300. Stevens agrees to accept a note for $100,000 in partial settlement of his ownership equity. The remainder of his claim is to be paid in cash. Ford and Rollins are to share equally in the net income or net loss of the new partnership. a. Journalize the entry to record the adjustment of the assets to bring them into agreement with current market prices. For a compound transaction, if an amount box does not require an entry, leave it blank.

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  1. 24 March, 14:18
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    Check the explanation

    Explanation:

    Req A:

    Journal Entries for Adjustment of Assets

    Dr In $ Cr in $

    Merchandise Inventory Dr. 22,300

    Revaluation Account Cr. 22,300

    Revaluation Account Dr. 1,300

    Allowance for Doubtful debts Cr. 1,300

    Revaluation Account Dr. 21,000

    Lane Stevens Capital Cr. 9,000

    Cherrie Ford Capital Cr. 6,000

    La Marcus Ford Capital Cr. 6,000

    Req B:

    Journal Entries To record of Stevens Withdrawal

    Lane Stevens Capital Dr. (150,000+9,000) 159,000

    Note Payable Cr. 100,000

    Cash Account Cr. 59,000
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