Following is the condensed balance sheet of Martinez, O'Neill and Clemens, partners who share profits or losses in the ratio of 2 : 3 : 5. Cash $38,400 Liabilities $160,000 Other assets 601,600 Capital - Martinez 86,400 Capital - O'Neill 140,800 Capital - Clemens 252,800 Total assets $640,000 Total liabilities and capital $640,000 (a) Assume that the partnership's assets and liabilities are fairly valued as shown. The partners wish to admit Jeter as a partner with a 30 percent interest in capital, profits, and losses. They require Jeter to invest an amount such that bonus or goodwill adjustments are not needed. How much should Jeter invest for the 30 percent share? (Round your answer to two decimal places.) $Answer (b) Assume instead that the existing partners, all of whom contemplate retirement relatively soon, decide to sell Jeter 30 percent of their respective partnership interests for a total payment of $168,000. This payment will be made proportionately to Martinez, O'Neill, and Clemens. The partners agree that implied goodwill is to be recorded prior to the transaction with Jeter. What are the capital balances of the four partners after the transaction with Jeter? Balances After Acquisition Martinez Answer O'Neill Answer Clemens Answer Jeter Answer
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Following is the condensed
| Cash | $38,400 | Liabilities | $160,000 |
| Other assets | 601,600 | Capital - Martinez | 86,400 |
| Capital - O'Neill | 140,800 | ||
| Capital - Clemens | 252,800 | ||
| Total assets | $640,000 | Total liabilities and capital | $640,000 |
(a) Assume that the
$Answer
(b) Assume instead that the existing partners, all of whom contemplate retirement relatively soon, decide to sell Jeter 30 percent of their respective partnership interests for a total payment of $168,000. This payment will be made proportionately to Martinez, O'Neill, and Clemens. The partners agree that implied goodwill is to be recorded prior to the transaction with Jeter. What are the capital balances of the four partners after the transaction with Jeter?
| Balances After Acquisition | |
|---|---|
| Martinez | Answer |
| O'Neill | Answer |
| Clemens | Answer |
| Jeter | Answer |
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