The E.N.D. partership has the following capital balances as of the end of the cu

Question

The E.N.D. partership has the following capital balances as of the end of the current year: Pineda Adams Fergie Gomez $ 330,000 290,000 260,000 240,000 Total capital $1,120,000 a. Assume that the partners share profits and losses 3:3:2:2, respectively. Fergie retires and is paid $296,000 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? Capital Balance Pineda Adams Gomez b. Assume that the partners share profits and losses 4:3:2:1, respectively. Pineda retires and is paid $350,000 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.) Capital Balance Adams Fergie Gomez

Explanation / Answer

Answer

A)

20 % of goodwilll was paid = paid amount - capital balance

= 296000 - 260000

= 36000

100 % goodwill = 36000 / 20 %

  

b )

bonus method

pineda = paid amount - capital balance

= 350000 - 330000

= 20000

particulars working goodwill working capital balance pineda 180000 * 30 % 54000 330000 + 54000 384000 adams 180000 * 30 % 54000 290000 + 54000 344000 gomez 180000 * 20 % 36000 240000 + 36000 276000

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