The partnership of Ace, Jack, and Spade has been in business for 25 years. On De

Question

The partnership of Ace, Jack, and Spade has been in business for 25 years. On December 31, 20x5, Spade decided to retire. The partnership balance sheet reported the following capital balances for each partner at D ecember 31, 20xs: Ace, Capital Jack, Capital Spade, capital s151,500 200,600 120,900 The partners allocate partnership income and loss in the ratio 20:30-50, respectively Required Record Spade's withdrawal under each of the following independent situations. tal interest for $151,100 in a personal transaction. Partnership assets were not revalued, and partnership ognized. (If no entry is required for a transaction/event, select "No journal entry required" in the first account goodwill was not rec field.) View transaction list View journal entry worksheet No Event General Journal Debit Credit Spade, Capital Jack, Capital 105 17 Next Pret

Explanation / Answer

As per policy only first four parts of a question will be answered

Part A

Part B

Amount paid by Jack for spade's capital interest...... 151100

Recorded amount of spade's capital interest........ 120900

Goodwill attributed to spade........ 30200

Spade's share in profit and loss....... 50%

Implied value of partnership's Goodwill (30200/50%).....60400

Part C

Amount paid to spade on retirement................. 180300

Spade's capital credit............................................ 120900

Bonus paid to spade shared by ace and Jack in ratio of (40:60)...........59400

Part D

Gain recognized on transfer of land = 121900-100300 =21600

Spade's capital balance after allocation of gain on land = 120900+((121900-100300)*50%) = 120900+10800 =131700

Amount paid to spade (121900+61600).........183500

Spade's capital interest.................................... 131700

Bonus paid to spade shared by ace and Jack in ratio of 40:60............51800

No. event general journal debit credit A 1 spade, capital 120900 Jack, capital 120900

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