The E.N.D. partnership has the following capital balances as of the end of the c

Question

The E.N.D. partnership has the following capital balances as of the end of the current year: Pineda Adams Fergie Gomez $ 140,000 120,000 110,000 100,000 Total capital $ 470,000 a. Assume that the partners share profits and losses 3:3:2:2, respectively. Fergie retires and is paid $140,000 based on the terms of the original partnership agreement. If the goodwill method is used, what is the capital balance of the remaining three partners? Capital Balance Pineda Adams Gomez b. Assume that the partners share profits and losses 4:3:2:1, respectively. Pineda retires and is paid $340,000 based on the terms of the original partnership agreement. If the bonus method is used, what is the capital balance of the remaining three partners? (Do not round your intermediate calculations Round your final answers to the nearest dollar amounts.) Capital Balance Adams Fergie Gomez

Explanation / Answer

Ans. A Calculations of capital balances of remaining partners Goodwill Calculation Amount paid to fergie 1,40,000 Less: Fergie's Capital -110000 Goodwill 30000 Fergie share 20% in goodwill 30,000 Total Goodwill = 30000/20% =1,50,000 Distribution of goodwill Pineda 45000 Adams 45000 Gomez 30000 New Capital Balance Pineda 185000 Adams 165000 Gomez 130000 Ans. B Calculations of capital balances of remaining partners Goodwill Calculation Amount paid to Pineda 340000 Less: Pineda's Capital -140000 Goodwill 200000 Pineda share 40% in goodwill 200000 Total Goodwill = 200000/40% 500000 Distribution of goodwill Adams 150000 Fergie 100000 Gomez 50000 New Capital Balance Adams 270000 Fergie 210000 Gomez 150000

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.