The E.N.D. partnership has thefolowing capital balances as of the end of the cur

Question

The E.N.D. partnership has thefolowing capital balances as of the end of the current year: Pineda $ 140,000 120,000 110,000 100,000 Fergie Gomez 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 185,000 Adams 165,000 Gomez 130,000 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

b.If bonus method is used,

the amount of goodwill paid to Pineda = $340,000 - $140,000 =>$200,000.

under bonus method this goodwill $200,000 to Pineda is to be met in the ratio of 3:2:1 by remaining partners

=>adams will meet =>$200,000 * 3/6 =>$100,000.

Fergie will meet => $200,000 * 2*6 =>$66,666.67.

gomez will meet =>$200,000*1/6 =>$33,333.33.

now,

the capital balances will be....(rounded to nearest dollar).

Capital balance Adams (120,000 -100,000) $20,000 Fergie (110,000 - 66,666.67) $43,333 Gomez (100,000 - 33,333.33) $66,667

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