Question

The E.N.D. partnership has the following capital balances as of the end of the current year: Pineda $ 280,000 Adams 250,000 Fergie 240,000 Gomez 230,000 Total capital $ 1,000,000 a. Assume that the partners share profits and losses 3:3:2:2, respectively. Fergie retires and is paid $289,000 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?

pineda:

adams:

gomez:

b. Assume that the partners share profits and losses 4:3:2:1, respectively. Pineda retires and is paid $300,000 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.)

adams:

fergie:

gomez:

Answer 1

	Total	Pineda	Adams	Fergie	Gomez
Capital balances	1,000,000	280,000	250,000	240,000	230,000
Goodwill	245,000	73,500	73,500	49,000	49,000
Subtotal	1,245,000	353,500	323,500	289,000	279,000
Payment	(289,000)			(289,000)
After retairment	956,000	353,500	323,500	0	279,000

Pineda : 353,500

Adams : 323,500

Gomez : 279,000

b.

	Total	Pineda	Adams	Fergie	Gomez
Capital balances	1,000,000	280,000	250,000	240,000	230,000
Payment	300,000	(300,000)
Subtotal	700,000	(20,000)	250,000	240,000	230,000
Bonus		20,000	(10,000)	(6,667)	(3,333)
After retairment	700,000	0	240,000	233,333	226,667

Adams : 240,000

Fergie : 233,333

Gomez : 226,667