Final answer:
Edward Santos's purchase of Ferdinand Romero's partnership interest for 300,000 is recorded with a debit to Investment in Partnership and a credit to Cash for 300,000. This transaction is between individual partners and does not affect the partnership's books.
Step-by-step explanation:
When Edward Santos directly purchased Ferdinand Romero's 250,000 partnership interest for 300,000, the entry to record the transaction would be a debit to the Investment in Partnership account and a credit to Cash (or Bank) account for the amount of 300,000. It is important to note that this transaction is between the individual partners and the partnership itself does not record this transaction. If there are any differences between the amount paid and the capital account balance of the selling partner, it would be recognized by the buying and selling partners The entry to record the transaction of Edward Santos directly purchasing Ferdinand Romero's 250,000 partnership interest for 300,000 would be as follows:
Debit: Partnership Interest - Ferdinand Romero ($250,000)Credit: Cash ($300,000)Debit: Gain on Purchase of Partnership Interest ($50,000)Here, Edward Santos debits the Partnership Interest account to reflect the amount paid for the purchase. The Cash account is credited to show the amount of cash exiting the business. Lastly, a debit is made to the Gain on Purchase of Partnership Interest account to record any gain from the purchase.