Liabilities. $120,000 Assets $320,000 Athos, capital.. Porthos, capital 70,000 50,000 Aramis, capital.
A
According to the articles of partnership, Athos is to receive an allocation of 50 percent of all partnership
For each of the following independent situations, prepare the
- Porthos, with permission of the other partners, decides to sell half of his partnership interest to D’Artagnan for $50,000 in cash. No asset revaluation or
goodwill is to be recorded by the partnership. - All three of the present partners agree to sell 10 percent of each partnership interest to D’Artagnan for a total cash payment of $25,000. Each partner receives a negotiated portion of this amount. Goodwill is recorded as a result of the transaction.
- D’Artagnan is allowed to become a partner with a 10 percent ownership interest by contributing $30,000 in cash directly into the business. The bonus method is used to record this admission.
- Use the same facts as in requirement (c) except that the entrance into the partnership is recorded by the goodwill method.
- D’Artagnan is allowed to become a partner with a 10 percent ownership interest by contributing $12,222 in cash directly to the business. The goodwill method is used to record this transaction.
Aramis decides to retire and leave the partnership. An independent appraisal of the business and its assets indicates a current fair value of $280,000. Goodwill is to be recorded. Aramis will then be given the exact amount of cash that will close out his capital account.
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