Krishnamurti,Patel,and Hamilton had a long-standing partnership with equal profit sharing.Patel desired to withdraw from the partnership.Partnership assets were revalued and the partners' capital accounts were adjusted.Afterwards,the partner balances were: $$\begin{array} { | l | r | }
\hline \text { Krishnamurti } & \$ 250,000 \
\hline \text { Patel } & \$ 290,000 \
\hline \text { Hamilton: } & \$ 220,000 \
\hline
\end{array}$$ Due to legal complications,the partners agreed that Patel would withdraw for an amount that was less than book value.The agreed cash payment was $200,000.The journal entry for this transaction would be:

Question

Krishnamurti,Patel,and Hamilton had a long-standing partnership with equal profit sharing.Patel desired to withdraw from the partnership.Partnership assets were revalued and the partners' capital accounts were adjusted.Afterwards,the partner balances were: $$\begin{array} { | l | r | } 
\hline \text { Krishnamurti } & \$ 250,000 \
\hline \text { Patel } & \$ 290,000 \
\hline \text { Hamilton: } & \$ 220,000 \
\hline
\end{array}$$ Due to legal complications,the partners agreed that Patel would withdraw for an amount that was less than book value.The agreed cash payment was $200,000.The journal entry for this transaction would be:

Quizplus · Accepted Answer

Patel's capital account needs to be reduced by the full amount of $290,000 to reflect his withdrawal from the partnership. The cash payment to Patel is $200,000, which is debited from cash. The difference of $90,000 ($290,000 - $200,000) is shared equally between the remaining partners, Krishnamurti and Hamilton, increasing their capital accounts by $45,000 each.

Krishnamurti,Patel,and Hamilton Had a Long-Standing Partnership with Equal Profit Sharing