1. Include in the narrative: Who is retiring from the partnership? Why is he/she retiring? (Not working any more, moving away, dissatisfied with the other partners, setting up a new business etc). Is the retiring partner being paid any goodwill? How much? Or is the retiring partner leaving some equity behind? Why and how much?
3. Revalue/devalue at least one some partnership asset.
4. Calculate the equity owing to the retiring partner.
5. Prepare a journal entry to account for the payment to the retiring partner including bonus to or from the remaining partners. Include a narration.
6. What is the equity of each of the remaining partners and of the business after settlement to the retiring partner?