E 16-12 Partner retirement entries—Fair value adjustment A balance sheet at December 31, 2016, for the Bec, Dee, and Lyn partnership is summarized as follows: Assets $800,000 Liabilities $200,000 Loan to Dee 100,000 Bec capital (50%) 300,000   $900,000 Dee capital (40%) 300,000     Lyn capital (10%) 100,000       $900,000 Dee is retiring from the partnership. The partners agree that partnership assets, excluding Dee’s loan, should be adjusted to their fair value of $1,000,000 and that Dee should receive $310,000 for her capital balance net of the $100,000 loan. The bonus approach is used; therefore, no goodwill is recorded. Required Determine the capital balances of Bec and Lyn immediately after Dee’s retirement.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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E 16-12 Partner retirement entries—Fair value adjustment

A balance sheet at December 31, 2016, for the Bec, Dee, and Lyn partnership is summarized as follows:

Assets

$800,000

Liabilities

$200,000

Loan to Dee

100,000

Bec capital (50%)

300,000

 

$900,000

Dee capital (40%)

300,000

 

 

Lyn capital (10%)

100,000

 

 

 

$900,000

Dee is retiring from the partnership. The partners agree that partnership assets, excluding Dee’s loan, should be adjusted to their fair value of $1,000,000 and that Dee should receive $310,000 for her capital balance net of the $100,000 loan. The bonus approach is used; therefore, no goodwill is recorded.

Required

Determine the capital balances of Bec and Lyn immediately after Dee’s retirement.

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