Part 1. Davis, Brown, and Nell are partners and share income and loss in a 5:1:4 ratio. The partnership’s capital balances are as follows: Davis, $303,000; Brown, $74,000; and Nell, $223,000. Davis decides to withdraw from the partnership, and the partners agree not to have the assets revalued upon Davis’s retirement. Prepare journal entries to record Davis’s April 30 withdrawal from the partnership under each of the following separate assumptions: Davis
(a) Sells her interest to Leer for $125,000 after Brown and Nell approve the entry of Leer as a partner;
(b) Gives her interest to a daughter-in-law, Gibson, and thereafter Brown and Nell accept Gibson as a partner;
(c) Is paid $303,000 in partnership cash for her equity; (d) is paid $175,000 in partnership cash for her equity; and
(e) Is paid $100,000 in partnership cash plus manufacturing equipment recorded on the partnership books at $269,000 less its accumulated depreciation of $168,000.
Part 2. Assume that Davis does not retire from the partnership described in Part 1. Instead, McCann is admitted to the partnership on April 30 with a 20% equity. Prepare journal entries to record the entry of McCann under each of the following separate assumptions: McCann invests (a) $150,000;
(b) $98,000; and
(c) $213,000.