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Lecture 05 Partnership Dissolution Withdrawal

Partner Cueto withdrew from the Alvarez, Tabor and Cueto Partnership on June 1, 2021. The partnership's assets and capital accounts on that date are provided. Journal entries are required to record Cueto's withdrawal under different payment assumptions, including paying Cueto more or less than their capital account balance, accepting cash and assets, and payment coming directly from another partner.

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129 views1 page

Lecture 05 Partnership Dissolution Withdrawal

Partner Cueto withdrew from the Alvarez, Tabor and Cueto Partnership on June 1, 2021. The partnership's assets and capital accounts on that date are provided. Journal entries are required to record Cueto's withdrawal under different payment assumptions, including paying Cueto more or less than their capital account balance, accepting cash and assets, and payment coming directly from another partner.

Uploaded by

Angel Cortez
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Sir Win – Accounting Lectures

Jokes Tagalog
Stories Legit Professor
Life Lessons

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Lecture 05: Partnership Dissolution – Withdrawal
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On June 1, 2021, Partner Cueto decided to withdraw from the Alvarez, Tabor and
Cueto Partnership. Their profit and loss ratio is 3:2:1, respectively. Partnership
assets are to be used to acquire Cueto’s partnership interest. The statement of
financial position for the partnership on that date follows:

Alvarez, Tabor and Cueto Partnership


Statement of Financial Position
June 1, 2021
Assets
Cash P74,000
Trade Accounts Receivable (net) 36,000
Plant Asset (net) 135,000
Goodwill (net) __30,000
Total P275,000

Liabilities and Partners’ Capital


Liabilities P45,000
Alvarez, Capital 120,000
Tabor, Capital 60,000
Cueto, Capital __50,000
Total P275,000

Required:

Prepare the Journal entries to record Cueto’s withdrawal under each of the
following assumptions:

1. Cueto is paid P54,000, and excess amount paid over Cueto’s capital account
balance is recorded as a bonus to Cueto from Alvarez and Tabor.
2. Cueto is paid P45,000, and the difference is recorded as a bonus to Alvarez and
Tabor from Cueto.
3. Cueto 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.

4. Assume that it is not the partnership who pays the interest of Cueto but the
payment comes directly from Partner Tabor for 53,500 cash.

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