Problem:
Hunter, Folgers, and Tulip have been partners while sharing net income and loss in a 5:3:2 ratio. On January 31, the date Tulip retires from the partnership, the equities of the partners are Hunter, $360,000; Folgers, $252,000; and Tulip, $180,000.
Required:
Question: Prepare journal entries to record Tulip's retirement under each of the following separate assumptions.
- Assume Tulip is paid $180,000 for her equity using partnership cash.
- Assume Tulip is paid $200,000 for her equity using partnership cash.
- Assume Tulip is paid $150,000 for her equity using partnership cash.
Note: Provide support for your rationale.