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Journal entries for entrepreneur's relief

Partnership giving retiring partner a payout

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Hi

I have a client who is in part of a family business (partnership) but has now decided to retire.

I will try to claim entrerpeneur's allowance for him but my question is...what journal entries are requitred in the partnership to reflect the monies given to the retiring partner?

 

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By taxguru
16th Dec 2016 07:26

Many entries may be required; new profit sharing arrangements, revaluation of assets and goodwill etc. None for entrepreneurs' relief though!!!

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By johngroganjga
16th Dec 2016 08:55

Not sure what you mean by monies "given". Is he not just being paid what he is entitled to?

You debit the payments to him to his capital account. That is all. Job done.

If the payments don't leave the capital account at zero you may need to visit the other entries made to the capital account to see why they are not in harmony with the agreement.

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By woodford43
17th Dec 2016 13:26

Many thanks for your time in answering.

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