The partnership of Matteson, Richton, and O'Toole has existed for a number of years. At the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The partnership of Matteson, Richton, and O'Toole has existed for a number of years. At the present time, the partners have the following capital balances and profit and loss sharing percentages: Partner Matteson Richton O'Toole Capital Balance $ 126,000 174,000 Profit and Loss Percentage 80,000 30% 50 20 O'Toole elects to withdraw from the partnership, leaving Matteson and Richton to operate the business. Following the original partnership agreement, when a partner withdraws, the partnership and all of its individual assets are to be reassessed to current fair values by an independent appraiser. The withdrawing partner will receive cash or other assets equal to that partner's current capital balance after including an appropriate share of any adjustment indicated by the appraisal. Gains and losses indicated by the appraisal are allocated using the regular profit and loss percentages. An independent appraiser is hired and estimates that the partnership as a whole is worth $500,000. Regarding the individual assets, the appraiser finds that a building with a book value of $235,000 has a fair value of $330,000. The book values for all other Identifiable assets and liabilities are the same as their appraised fair values. Accordingly, the partnership agrees to pay O'Toole $100,000 upon withdrawal. Matteson and Richton, however, do not wish to record any goodwill in connection with the change in ownership. Required: Prepare the journal entries to record O'Toole's withdrawal from the partnership. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. View transaction list Journal entry worksheet 1 2 Record the building appreciation. Note: Enter debits before credits. Transaction General Journal Debit Credit The partnership of Matteson, Richton, and O'Toole has existed for a number of years. At the present time, the partners have the following capital balances and profit and loss sharing percentages: Partner Matteson Richton O'Toole Capital Balance $ 126,000 174,000 Profit and Loss Percentage 80,000 30% 50 20 O'Toole elects to withdraw from the partnership, leaving Matteson and Richton to operate the business. Following the original partnership agreement, when a partner withdraws, the partnership and all of its individual assets are to be reassessed to current fair values by an independent appraiser. The withdrawing partner will receive cash or other assets equal to that partner's current capital balance after including an appropriate share of any adjustment indicated by the appraisal. Gains and losses indicated by the appraisal are allocated using the regular profit and loss percentages. An independent appraiser is hired and estimates that the partnership as a whole is worth $500,000. Regarding the individual assets, the appraiser finds that a building with a book value of $235,000 has a fair value of $330,000. The book values for all other Identifiable assets and liabilities are the same as their appraised fair values. Accordingly, the partnership agrees to pay O'Toole $100,000 upon withdrawal. Matteson and Richton, however, do not wish to record any goodwill in connection with the change in ownership. Required: Prepare the journal entries to record O'Toole's withdrawal from the partnership. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round your intermediate calculations. View transaction list Journal entry worksheet 1 2 Record the building appreciation. Note: Enter debits before credits. Transaction General Journal Debit Credit
Expert Answer:
Related Book For
Fundamentals of Advanced Accounting
ISBN: 978-0077862237
6th edition
Authors: Joe Ben Hoyle, Thomas Schaefer, Timothy Doupnik
Posted Date:
Students also viewed these accounting questions
-
The partnership of Matteson, Richton, and OToole has existed for a number of years. At the present time the partners have the following capital balances and profit and loss sharing percentages:...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
John works in a factory as a Quality Expert and is responsible for doing quality product testing before the finished products are sent to the customers. John takes a sample of 10 from a batch of 1000...
-
Guy Spy, a private investigation firm, has the following costs for December: Direct labor: $190 per case Service overhead Salary for director of investigations........................ $ 4,800...
-
Name two methods you can use to add a node to the DOM tree, and explain the difference between them.
-
XCBob, Inc. is an online motorcycle and ATV parts business from the owners home. XCBob entered into oral agreements with the defendant, Ed Tucker Distributers, for purchases of various materials to...
-
Andrew Cha, the founder of Colorscope, Inc., a small, vibrant firm in the graphic arts industry, had seen his business change dramatically over the years. The rapid development of such technologies...
-
What are NoSQL technologies? Explain with example and reference.
-
2. Find the magnetic dipole moment for a circular loop in the r-y plane and carrying current I in the clockwise direction. Find the magnetic field at a point along the z direction, far away from the...
-
X Company has four inventory items at year end. Inventory information (based on FIFO) is as follows: Determine X Companys ending inventory using the lower-of-cost-or-market method. Item 1 2 3 Cost...
-
Emily Eagels owned stock with a basis of $50,000 which she sold to her sister, Janet, for $42,000. Three months later, Janet sold the stock through a broker for $52,000. What is the gain or loss to...
-
On September 16, 2019, Donald Dunn sold for $80,000 property with an adjusted basis of $20,000. The buyer paid $20,000 down with the remaining $60,000 to be paid in four equal annual installments of...
-
Sheryl Sugarman owned 60 percent of the outstanding stock of Octavian Corp. The corporation sold stock (cost $5,000) to her for $2,500. Sheryl sold the stock for $7,000. What is the corporation's...
-
During 2019, Peter Patel sold a piece of land he had purchased for $40,000. The buyer paid cash of $50,000 and transferred to Peter a piece of farm equipment having a fair market value of $30,000....
-
Explain the role of performance management in health care. How does performance management contribute to the organizations' goals and objectives? What do you believe to be the challenges and rewards...
-
Classify each of the following as direct costs or indirect costs of operating the Pediatrics ward for children at the Cleveland Clinic: a. Wi-Fi covering the entire hospital campus b. Net cost of...
-
Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2015, for $802,720 cash. At the acquisition date, Sierras total fair value, including the...
-
The following transactions relate to the General Fund of the city of Lost Angels for the year ending December 31, 2015. Prepare a statement of revenues, expenditures, and other changes in fund...
-
Reimers Company acquires Rollins Corporation on January 1, 2014. As part of the agreement, the parent states that an additional $100,000 payment to the former owners of Rollins will be made in 2016,...
-
Using the data in Tables 7.13 and 7.14, does this farm qualify for debt (i.e., is the farm profitable, liquid, and solvent)? Table 7.13 Table 7.14 Item 2006 2007 2008 2009 2010 2011 2012 Gross cash...
-
The book basis of depreciable assets for Erwin Co. is 900,000 and the tax basis is 700,000 at the end of 2015. The enacted tax rate is 34% for all periods. Determine the amount of deferred taxes to...
-
How does an asset gain or loss develop in pension accounting?
Study smarter with the SolutionInn App