On December 31, the capital balances and income ratios in the Poker Company are as follows.

Instructions

(a) Journalize the withdrawal of Jack under each of the following independent assumptions.

(1) Each of the remaining partners agrees to pay $13,000 in cash from personal funds to purchase Jack’s ownership equity. Each receives 50% of Jack’s equity.

(2) Queen agrees to purchase Jack’s ownership interest for $18,000 in cash.

(3) From partnership assets, Jack is paid $26,000, which includes a bonus to the retiring partner.

(4) Jack is paid $11,000 from partnership assets. Bonuses to the remaining partners are recognized.

(b) If Queen’s capital balance after Jack’s withdrawal is $32,000, what were (1) the total bonus to the remaining partners and (2) the cash paid by the partnership to Jack?

Transcribed Image Text:

Partner Capital Balance Income Ratio A. King $70,000 60% L. Queen 30,000 30 B. Jack 20,000 10