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Lewis, Sadie and Warren are partners with the following capital balances and profit and loss percentages: Lewis:        $120,000 (60%) Sadie:         $ 60,000  (20%) Warren:      $ 40,000  (20%) Sadie wishes to withdraw from the partnership and it is agreed that she will receive her current capital balance plus his share of any valuation adjustments associated with the fair value of the whole business being greater than book value. Assume that the fair value of the whole business is $100,000 greater than the book value. The bonus method is being used.  What will the balance of Warren’s capital account be after the withdrawal of Sadie.

Lewis, Sadie and Warren are partners with the following capital balances and profit and loss percentages: Lewis:        $120,000 (60%) Sadie:         $ 60,000  (20%) Warren:      $ 40,000  (20%) Sadie wishes to withdraw from the partnership and it is agreed that she will receive her current capital balance plus his share of any valuation adjustments associated with the fair value of the whole business being greater than book value. Assume that the fair value of the whole business is $100,000 greater than the book value. The bonus method is being used.  What will the balance of Warren’s capital account be after the withdrawal of Sadie.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Lewis, Sadie and Warren are partners with the following capital balances and profit and loss percentages:

Lewis:        $120,000 (60%)

Sadie:         $ 60,000  (20%)

Warren:      $ 40,000  (20%)

Sadie wishes to withdraw from the partnership and it is agreed that she will receive her current capital balance plus his share of any valuation adjustments associated with the fair value of the whole business being greater than book value. Assume that the fair value of the whole business is $100,000 greater than the book value. The bonus method is being used.  What will the balance of Warren’s capital account be after the withdrawal of Sadie.

 

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