Katie withdrew from the partnership of Katie,Courtney,and Nathan,and accepted $10,000 cash.Her capital balance was $16,000 and the difference will be shared in a ratio of 2:1 for Courtney and Nathan,respectively.The entry would be to:

Question

Quizplus · Accepted Answer

When Katie withdrew from the partnership, she received $10,000 cash. This transaction affects both the cash account and the capital accounts of the partners. Katie's capital account had a balance of $16,000, so she would need to be credited for that amount. The remaining balance of $6,000 ($16,000 - $10,000) would be split between Courtney and Nathan, in a ratio of 2:1 respectively. So, Courtney would receive $4,000 ($6,000 * 2/3) and Nathan would receive $2,000 ($6,000 * 1/3).

Therefore, the entry to record Katie's withdrawal would be:
Debit Cash $10,000
Credit Katie, Capital $16,000
Credit Courtney, Capital $4,000
Credit Nathan, Capital $2,000

Katie Withdrew from the Partnership of Katie,Courtney,and Nathan,and Accepted $10,000