Beard,Tanner,Williams Are Operating as a Partnership

question 26

Essay

Beard,Tanner,Williams are operating as a partnership.The capital account balances at December 31,2013 are $254,000,$195,000 and $286,000 respectively.Record the entries for the following independent situations.
a.The partners vote to admit Sturges.She is going to invest $150,000 for a 15% interest in the partnership.Profit and losses are split equally between the existing partners.
b.Sturges agrees to buy 50% of Williams interest by paying him $150,000 directly.
c.The partners need new ideas and agree to give Sturges a 20% interest in exchange for $150,000.Profits and losses are shared equally between the existing partners.
d.Williams wants to retire and is willing to leave the partnership in exchange for $281,000.Profits and losses were shared on the ratio of 2:3:5.

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Definitions:

Itemized Deduction

involves subtracting eligible expenses from one's taxable income, instead of taking the standard deduction. These expenses are listed out or itemized on the tax return.

Schedule A

An IRS form used for itemizing deductions such as medical and dental expenses, taxes paid, interest paid, gifts to charity, and casualty and theft losses.

Qualified Residence

A primary or secondary home that meets certain IRS criteria, allowing for potential mortgage interest deductions.

Deduction

An expense that can be subtracted from gross income to reduce the amount of income subject to income tax.