Accounting for Partnerships

On December 31, the capital balances and income ratios in TEP Companyare as follows.

Instructions

1. Journalize the withdrawal of Posada under each of the following assumptions.
   
   1. Each of the continuing partners agrees to pay $18,000 in cash from personal funds to purchase Posada"s ownership equity. Each receives 50% of Posada"s equity.
   2. Emig agrees to purchase Posada"s ownership interest for $25,000 cash.
   3. Posada is paid $34,000 from partnership assets, which includes a bonus to the retiring partner.
   4. Posada is paid $22,000 from partnership assets, and bonuses to the remaining partners are recognized.
2. If Emig"s capital balance after Posada"s withdrawal is $43,600, what were (1) the total bonus to the remaining partners and (2) the cash paid by the partnership to Posada?

Solution