Reference no: EM132576068
The capital account balances of the partners in ABC Partnership on June 30, 20x1 before any necessary adjustments are as follows:
Capital accounts
A, Capital (20%) 600,000
B, Capital (30%) 1,000,000
C, Capital (50%) 400,000
Total 2,000,000
- The partnership reported profit of P3,600,000 for the six months ended June 30, 20x1.
Question 1: C retires on July 1, 20x1. It was agreed that C shall receive cash of ?2,000,000 and equipment with carrying amount of ?400,000 and fair value of ?1,200,000 as settlement of his interest in the partnership. The entry in the partnership's books to record the retirement of C includes
a. a debit to C's capital for ?400,000.
b. a debit to C's capital for ?2,200,000.
c. a debit to A's capital for ?240,000.
d. The transaction is not recorded in partnership's books.
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