David Winner is to retire from the partnership of Winner and Associates as of Ma

Question

David Winner is to retire from the partnership of Winner and Associates as of March 31, the end of the current fiscal year. After closing the accounts, the capital balances of the partners are as follows: David Winner, $210,000; Alexis Richards, $125,000; and Marcus Williams, $140,000. They have shared net income and net losses in the ratio of 3:2:2. The partners agree that the merchandise inventory should be increased by $32,000, and the allowance for doubtful accounts should be increased by $4,000. Winner agrees to accept a note for $150,000 in partial settlement of his ownership equity. The remainder of his claim is to be paid in cash. Richards and Williams are to share equally in the net income or net loss of the new partnership. Journalize the entry to record the adjustment of the assets to bring them into agreement with current market prices.

Explanation / Answer

Please find the journal entry as follows: David Winner, Capital Dr. 222000 Cash Cr. 72000 Note Payable Cr. 150000

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