Arthur Carlson,Maria Perez and Andrew Li Have a Partnership with Equal

question 137

Essay

Arthur Carlson,Maria Perez and Andrew Li have a partnership with equal profit sharing.Andrew Li has decided to withdraw from the partnership.The current balance sheet of the partnership appears as follows:
$\begin{array}{|l|r|l|l|r|}\hline\text { Assets }&&&\text { Liabilities \& Owner's Equity }\\\hline \text { Cash } & \$ 180,000 && \text { Accounts payable } & \$ 50,000 \\\hline \text { Inventory } & 240,000 && \text { Carlson, capital } & 200,000 \\\hline \text { Land } & 200,000 && \text { Perez, capital } & 180,000 \\\hline & & & \text { Li, capital } & 190,000 \\\hline \text { Total assets }& \$ 620,000 & & \text { Total liabilities \& owner's equity } & \$ 620,000 \\\hline\end{array}$ Prior to the final settlement,the assets have been appraised to determine their current fair market value.Fair values are as follow:
$$\begin{array} { | l | l | } \hline \text { Inventory: } & \$ 204,000 \\\hline \text { Land: } & \$ 440,000 \\\hline\end{array}$$ Required:
Provide the journal entries to revalue the inventory; and,record the withdrawal of Li assuming he receives $160,000 cash,and $90,000 inventory,for his equity.
$\begin{array}{|l|l|l|}\hline \quad\quad\quad&\text { }\quad\quad\quad\quad&\quad\quad\quad\\\hline &\text { }\\\hline &\text { }\\\hline &\text { }\\\hline \\\hline \\\hline \\\hline \\\hline \\\hline \\\hline \\\hline \\\hline \\\hline \end{array}$

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Definitions:

Social Security

A government program that provides financial assistance to people with inadequate or no income, especially the elderly and disabled.

Progressive

Referring to the support for or advocacy of improvements or reform in societal practices, often with a focus on social justice, equality, and modernization.

Tax Expenditures

Government losses in tax revenue due to exemptions, deductions, credits, and preferential tax rates.

Subsidize

To support an organization, activity, or economic sector by providing financial assistance, often from the government to keep prices low or to ensure it continues to operate.