Partners Danao, Diaz, Dolor and Dungca share profits in the ration of 40%, 30%, 15% and 15% respectively. The partnership agreement provides that in the event of the death of a partner, the firm shall continue until the fiscal period. Profits shall be considered to have been earned proportionately during the period and the deceased partner's capital shall be adjusted by his share of the profit or loss to the date of death.From the date of death until the date of settlement with the estate, there shall be added interest of 10% computed on the adjusted capital. The remaining partners shall continue to divide profits in the old ratio. Payment to the estate shall be made within 2 years from the date of partner's death. As of January 1, 2010, the capital balances of the partners were as follows :Danao 84000Diaz 75000Dolor 48000Dungca 45000
Dungca died on Sept. 30, 2010. The boooks of the partnership were closed as of Dec.31, arriving at a credit balance of 45000 for the income summary account.
On Dec 31, 2010, Dolor notified the remaining partners that he was retiring from the partnership and was willing to accept in settlement of his interest the balance of his capital account after the distribution of profits less 25 %
The remaining artners accepted his offer and issued a 120-day, 10 % note to Dolor in payment of his interest.
Required: journal entries to record the transactions above.