Question

Sale of partnership interestThe partners in the Biz Partnership have agreed that partner Mandy may sell her $100,000 equity in the partnership toBrittney, for which Brittney will pay Mandy $85,000. Present the partnership’s journal entry to record the sale of Mandy'sinterest to Brittney on September 30.

Answer 1

Answer:

Mandy Capital                                                Debit: 100,000

Brittney Capital                                               Credit: 100,000

Explanation:

The journal entry will be recorded as above. Mandy sold equity worth $100,000, so we will record the entry on transfer of equity by the equity value sold. Now, for this equity value both partners can decide the amount in which one will sell to other, which in this scenario is $85,000.

Answer 2

Journal Entries are shown below.

Given that,

• Mandy sell her equity in partnership of $100,000.
• Brittney has purchased Mandy equity of $100,000.
• We need to make journal entry to record sale of partnership.

According to the data, journal entries are as follows

Sept. 30 Mandy Capital A/c. Dr. $100,000

               To, Brittney Capital A/c  $100,000

        ( Being sale of partnership equity is recorded )

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