Answer:
-0.11% a year
Explanation:
Susan's real interest rate is the nominal rate of her investment subtracted by the percentage increase in CPI.
The percentage increase in CPI for 2005 was:
Therefore, Susan's real interest rate (i) was:
Profit Motive is the answer
Complete Question:
The O'Hara, Parness, and Lincoln partnership balance sheet reports capital of $50,000 for O'Hara, $125,000, for Parness, and $25,000 for Lincoln. O'Hara is withdrawing from the firm. The partners have shared profits and losses in the ratio of 1/2 to O'Hara, 1/4 to Parness, and 1/4 to Lincoln. The partnership agreement states that a withdrawing partner will receive cash equal to the book value of his partners' equity. Journalize the withdrawal of O'Hara.
Answer:
The O'Hara, Parness, and Lincoln Partnership
Journal Entry:
Date Description Debit Credit
O'Hara Capital A/c $50,000
Cash Account $50,000
To record the withdrawal of O'Hara and his capital interest.
Explanation:
The Partnership of O'Hara, Parness, and Lincoln can use the journal entry as above to record the withdrawal of a partner. The O'Hara's Capital account previously had a credit balance and cash will be involved in settling O'Hara, the journal entries to complete the withdrawal of O'Hara are a debit to the O'Hara's Capital account and a credit to the Cash account. This arrangement is in accordance with the partnership agreement. This is the most important governing law for the partnership and everything or transaction affecting the partnership must be done accordingly. It is only in the absence of an agreement that the laws or general practise concerning partnership can be applied.
