Partnership records show the following capital balances at the date of Hopkin's withdrawal: M. Hammel, $80,000; D. Hopkins, $210,000; and P. Houghton, $100,000. The three partners share income and loss equally. On December 31, after the death of Hopkins, the two remaining partners, Hammel and Houghton, and the estate of Hopkins agree that a payment of $200,000 will be made to settle the capital balance of Hopkins. Prepare the December 31 journal entry for the partnership.

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Lozano

Business

10 August, 18:54

Partnership records show the following capital balances at the date of Hopkin's withdrawal: M. Hammel, $80,000; D. Hopkins, $210,000; and P. Houghton, $100,000. The three partners share income and loss equally. On December 31, after the death of Hopkins, the two remaining partners, Hammel and Houghton, and the estate of Hopkins agree that a payment of $200,000 will be made to settle the capital balance of Hopkins. Prepare the December 31 journal entry for the partnership.

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Patience Wilson · Answer 1

The Journal entry is as follows:

D. Hopkins, Capital A/c Dr. $210,000

To cash A/c $200,000

To M. Hammer's Capital A/c $5,000

To P. Houghton's capital A/c $5,000

(To record the amount of Hopkins Capital balance)

Workings:

Income = D. Hopkins, Capital - Cash payment after his death

= $210,000 - $200,000

= $10,000

$10,000 is divided equally among M. Hammer and P. Houghton.