Agreement with current market prices

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Justin Marley is to retire from the partnership of Marley and Associates as of March 31, the end of the current fiscal year. After closing the accounts, the capital balances of the partners are as follows: Justin Marley, $140,000; Cherrie Ford, $70,000; and LaMarcus Rollins, $60,000. They have shared net income and net losses in the ratio of 3:2:2. The partners agree that the merchandise inventory should be increased by $15,500, and the allowance for doubtful accounts should be increased by $1,500. Marley agrees to accept a note for $100,000 in partial settlement of his ownership equity. The remainder of his claim is to be paid in cash. Ford and Rollins are to share equally in the net income or net loss of the new partnership.

Journalize the entries to record (a) the adjustment of the assets to bring them into agreement with current market prices and (b) the withdrawal of Marley from the partnership. Refer to the Chart of Accounts for exact wording of account titles.

Reference no: EM131289488

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