retirement of a partner & dissolution account

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Mad panic - can anyone explain dissolutionor realisation account and what to do.<BR>Also stuck with retirement of partner - please please help!!!<BR>Trog

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    retirement of a partner & dissolution account

    To retire a partner move their current account balance on to their capital account.<BR><BR>Then recognise goodwill by debiting goodwill account and crediting the partners capital accounts with the goodwill value in the current profit share ratio.<BR><BR>Total the retiring partners capital account, this is the total owed to them by the business.<BR><BR>Then debit his account with amount paid to him and credit bank.<BR><BR>(If there is not enough money in the bank you may need to debit the capital account and credit a creditors account as he becomes a creditor of the business.)<BR><BR>Then eliminate goodwill from the accounts by debiting to the existing partners in the new profit share ratio. (and credit goodwill)<BR><BR>Effectively the existing partners have been charged for the retiring partners goodwill.<BR><BR>No idea what a dissoution account is though, sorry.<BR><BR>Hope this helps!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    retirement of a partner & dissolution account

    Yep - thats great - thanks<BR>Good luck tomorrow!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    retirement of a partner & dissolution account

    You too, just hope it is a friendlier paper than yesterdays. Ha!

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