El Paso Physicians is a partnership of three doctors. The partners Profits and l

Question

El Paso Physicians is a partnership of three doctors. The partners Profits and losses in the ratio of 20% to Juan Hernandez, 40, to Garcia, and 40% to Eva Cahill. At December 31, 2008, the firm has the* | following balance sheet: Garcia withdraws from the partnership on December 31, 2008, to establish her own medical practice. Record Garcia's withdrawal from the partnership under the following plans: In a personal transaction, Garcia sells her equity to Maria Martinez, ^ who pays Garcia $100,000 for her interest. Hernandez and Cahill m accept Martinez as a partner, (pp. 608-610) The partnership pays Garcia cash of $20,000 and gives her a note 1 payable for the remainder of her book equity in settlement of her I partnership interest, (pp. 608-611) The partnership pays Garcia cash of $80,000. (pp. 610-611) The partners agree that the building is worth only $250,000 and this its accumulated depreciation should remain at $70,000. After the revaluation, the partnership settles with Garcia by giving her cash c $10,000 and a note payable for the remainder of her book equity, (pp. 608-611)

Explanation / Answer

1) Maria Martinez capital A/C DR $100,000

to Garcia's Personal A/C   $100,000

2) Garcia A/C DR $20,000

Bill / Note payable DR $30,000

   to Partnership A/C $50,000

3) Garcia A/C DR $80,000

   to Partnership A/C $80,000

4) Garcia A/C DR $10,000

   Cash A/C $10,000

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