rtnership of attorneys in the St. Louis, Missouri, area has the following balance sheet accounts as of January 1, 2021: Assets $ 346,000 Liabilities $ 110,000 Athos, capital 92,000 Porthos, capital 82,000 Aramis, capital 62,000 According to the articles of partnersh
A partnership of attorneys in the St. Louis, Missouri, area has the following
| Assets | $ | 346,000 | Liabilities | $ | 110,000 |
| Athos, capital | 92,000 | ||||
| Porthos, capital | 82,000 | ||||
| Aramis, capital | 62,000 | ||||
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
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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.
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D'Artagnan is allowed to become a partner with a 10 percent ownership interest by contributing $44,000 in cash directly into the business. The bonus method is used to record this admission.
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Use the same facts as in requirement (c) except that the entrance into the partnership is recorded by the goodwill method.
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D'Artagnan is allowed to become a partner with a 10 percent ownership interest by contributing $22,000 in cash directly to the business. The goodwill method is used to record this transaction.
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Aramis decides to retire and leave the partnership. An independent appraisal of the business and its assets indicates a current fair value of $320,000. 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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