The E.N.D. partnership has the following capital balances as of the end of the current year: Pineda $ 290,000 Adams 260,000 Fergie 250,000 Gomez 240,000 Total capital $ 1,040,000 Answer each of the following independent questions: Assume that the partners share profits and losses 3:3:2:2, respectively. Fergie retires and is paid $280,000 based on the terms of the original partnership agreement. If the goodwill method is used, what is the capital balance of the remaining three partners? Assume that the partners share profits and losses 4:3:2:1, respectively. Pineda retires and is paid $320,000 based on the terms of the original partnership agreement. If the bonus method is used, what is the capital balance of the remaining three partners? (Do not round your intermediate calculations. Round your final answers to the nearest dollar amounts.)
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.
The E.N.D. partnership has the following capital balances as of the end of the current year:
| Pineda | $ | 290,000 |
| Adams | 260,000 | |
| Fergie | 250,000 | |
| Gomez | 240,000 | |
| Total capital | $ | 1,040,000 |
Answer each of the following independent questions:
-
Assume that the partners share
profits and losses 3:3:2:2, respectively. Fergie retires and is paid $280,000 based on the terms of the original partnership agreement. If thegoodwill method is used, what is the capital balance of the remaining three partners? -
Assume that the partners share profits and losses 4:3:2:1, respectively. Pineda retires and is paid $320,000 based on the terms of the original partnership agreement. If the bonus method is used, what is the capital balance of the remaining three partners? (Do not round your intermediate calculations. Round your final answers to the nearest dollar amounts.)
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