Question

Carrtman, Kennie, and Kile are partners in the Southe Park partnership. Kennie's death required his withdrawal from the partnership. According to the partnership agreement, any bonuses will be allocated on the basis of fixed ratios prior to the withdrawal. Additional information available prior to the withdrawal follows.

Prepare journal entries to record the withdrawal of Kennie, under each of the following independent assumptions.

1. Carrtman and Kile agree to purchase 1/2 of Kennie's capital account balance for $40,000 each.

2. The partnership pays Kennie's estate $80,000 for his partnership interest.

3. The partnership pays Kennie's estate $59,000 for his partnership interest.

 

Carrtment

Kennie

Kile

Capital account balance

$54,000

$64,000

$42,000

Fixed Ratio

42%

30%

28%