Admission of New Partner

1. Payment to old partner is more than interest purchased.

Mimi 9,000 x 1/4 = 2,250 3,000

Gigi 15,000 x 1/4 = 3,750 3,750

= 6,000 6,750

Mimi Only: If Gigi included:

Mimi, Capital 2,250 Mimi, Capital 2,250

Lulu’s, Capital 2,250 Gigi, Capital 3,750

Lulu’s, Capital 6,000

2. Payment to old partners is less than the interest purchased.

Mimi 9,000 x 1/5 = 1,800 1,800

Gigi 15,000 x 1/5 = 3,000 2,000

= 4,800 3,800

Gigi Only: If Mimi included:

Gigi, Capital 3,000 Mimi, Capital 1,800

Lulu’s, Capital 3,000 Gigi, Capital 3,000

Lulu’s Capital 4,800

3. Payment to old partners is more than interest purchased.

Mimi 9,000 x 1/2 = 4,500 5,000

Gigi 15,000 x 1/4 = 3,750 6,000

= 8,250 11,000

Mimi, Capital 4,500

Gigi, Capital 3,750

Lulu’s, Capital 8,250

Withdrawal of Partner

Explanation:

18000/3 = 6,000

Beg Balance = 300,000

Add dep. = 6,000

End Balance = 306,000

Less Asset Received (18,000)

Issued Notes Payable: 288,000

Entries:

For the Revaluation of Asset:

Debit. Furniture and fixture 18,000

Credit. A Capital 6000

Credit. B Capital 6000

Credit. C Capital 6000

For the Retirement:

Debit. C Capital 306,000

Credit. Furniture and fixture 18000

Credit. Notes payable 288,000