The following balances as at October 31, 2016 for the Partnership of Kathy, Lilia, and Minda were as follows: Cash $50,000 Lilia, Loan 15,000 Non-cash assets 400,000 Totals $465,000 Liabilities $15,000 Kathy, loan 22,500 Kathy, capital 105,000 Lilia, capital 97,500 Minda, capital 225,000 Totals $465,000 Kathy has decided to retire from the partnership on October 31. Partners agreed to adjust the non-cash assets to their fair market value of $490,000. The estimated profit to October 31 is $100,000. Kathy will be paid $173,000 for her partnership interest inclusive of her loan which is repaid in full. Their profit and loss ratio is 3:3:4 to Kathy, Lilia, and Minda, respectively. Required: 1. Prepare entries for the retirement of Kathy from the partnership. 2. What will be the balance of Lilia capital account after the retirement of Kathy
The following balances as at October 31, 2016 for the Partnership of Kathy, Lilia, and Minda were as follows: Cash $50,000 Lilia, Loan 15,000 Non-cash assets 400,000 Totals $465,000 Liabilities $15,000 Kathy, loan 22,500 Kathy, capital 105,000 Lilia, capital 97,500 Minda, capital 225,000 Totals $465,000 Kathy has decided to retire from the partnership on October 31. Partners agreed to adjust the non-cash assets to their fair market value of $490,000. The estimated profit to October 31 is $100,000. Kathy will be paid $173,000 for her partnership interest inclusive of her loan which is repaid in full. Their profit and loss ratio is 3:3:4 to Kathy, Lilia, and Minda, respectively. Required: 1. Prepare entries for the retirement of Kathy from the partnership. 2. What will be the balance of Lilia capital account after the retirement of Kathy
Chapter21: Partnerships
Section: Chapter Questions
Problem 2BCRQ
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Question
The following balances as at October 31, 2016 for the Partnership of Kathy, Lilia, and Minda were as follows:
Cash $50,000
Lilia, Loan 15,000
Non-cash assets 400,000
Totals $465,000
Liabilities $15,000
Kathy, loan 22,500
Kathy, capital 105,000
Lilia, capital 97,500
Minda, capital 225,000
Totals $465,000
Kathy has decided to retire from the partnership on October 31. Partners agreed to adjust the non-cash assets to their fair market value of $490,000. The estimated profit to October 31 is $100,000. Kathy will be paid $173,000 for her partnership interest inclusive of her loan which is repaid in full. Their profit and loss ratio is 3:3:4 to Kathy, Lilia, and Minda, respectively.
Required:
1. Prepare entries for the retirement of Kathy from the partnership.
2. What will be the balance of Lilia capital account after the retirement of Kathy?
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