Problem #5 Withdrawal of a Partner On July 10, 2019, Partner Ibrahim decided to withdraw from Cebedo, Basa, and Ibrahim Partnership. Their profit and loss ratio is 3:2:1, respectively. Partnership assets are to be used to acquire Ibrahim’s partnership interest. The statement of financial position for the partnership on that date follows: Cebedo, Basa and Ibrahim Statement of Financial Position July 10, 2019 Assets Cash - P 74,000 Trade Accounts Receivable (net)- 36,000 Plants Assets (net)- 135,000 Goodwill (net)- 30,000 Total Assets- P275,000 Liabilities and Partners' Capital Liabilities-P 45,000 Cebedo, Capital- 120,000 Basa, Capital- 60,000 Ibrahim, Capital- 50,000 Total Liabilities and Partners' Capital-P275,000 Required: Prepare the journal entries to record Ibrahim’s withdrawal under each of the following assumptions: Ibrahim is paid P54,000, and the excess amount paid over Ibrahim’s capital account balance is recorded as a bonus to Ibrahim from Cebedo and Basa. Ibrahim is paid P54,000, and the difference is recorded as a bonus to Cebedo and Basa from Ibrahim. Ibrahim accepted cash of P40,500 and plant assets (equipment) with a current fair value of P9,000. The equipment had cost P30,000 and was 60% depreciated, with no residual value (Record any gain or loss on the disposal of the equipment in the partner’s capital accounts).

SWFT Individual Income Taxes

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Author:YOUNG

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Chapter11: Investor Losses

Section: Chapter Questions

Problem 38P

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Problem #5

Withdrawal of a Partner

On July 10, 2019, Partner Ibrahim decided to withdraw from Cebedo, Basa, and Ibrahim Partnership. Their profit and loss ratio is 3:2:1, respectively. Partnership assets are to be used to acquire Ibrahim’s partnership interest. The statement of financial position for the partnership on that date follows:

Cebedo, Basa and Ibrahim

Statement of Financial Position

July 10, 2019

Assets
Cash - P 74,000
Trade Accounts Receivable (net)- 36,000
Plants Assets (net)- 135,000
Goodwill (net)- 30,000
Total Assets- P275,000

Liabilities and Partners' Capital
Liabilities-P 45,000
Cebedo, Capital- 120,000
Basa, Capital- 60,000
Ibrahim, Capital- 50,000
Total Liabilities and Partners' Capital-P275,000

Required:

Prepare the journal entries to record Ibrahim’s withdrawal under each of the following assumptions:

Ibrahim is paid P54,000, and the excess amount paid over Ibrahim’s capital account balance is recorded as a bonus to Ibrahim from Cebedo and Basa.
Ibrahim is paid P54,000, and the difference is recorded as a bonus to Cebedo and Basa from Ibrahim.
Ibrahim accepted cash of P40,500 and plant assets (equipment) with a current fair value of P9,000. The equipment had cost P30,000 and was 60% depreciated, with no residual value (Record any gain or loss on the disposal of the equipment in the partner’s capital accounts).

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