The E.N.D. partnership has the following capital balances as of the end of the current year: Pineda $ 310,000 Adams 280,000 Fergie 270,000 Gomez 260,000 Total capital $ 1,120,000 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 $312,000 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 $360,000 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.)
1. Goodwill method:
Goodwill = (312000-270000)/0.2) = $210,000
| Goodwill | Old capital | New capital | Paid | Net New capital | |
| Pineda | $63,000 | $310000 | $373000 | $373000 | |
| Adams | $63,000 | 280000 | 343000 | 343000 | |
| Fregie | $42,000 | 270000 | 312000 | -312000 | 0 |
| Gomez | $42,000 | 260000 | 302000 | 302000 |
2. Bonus method:
Bonus = (360000-310000) = 50,000
| Bonus(allocated in profit ratio) | Old capital | New capital | Net new capital | |
| Pineda | 50,000 | $310000 | (360,000) | 0 |
| Adams | (25000) | 280000 | 255000 | 255000 |
| Fregie | (16,667.67) | 270000 | 253333.33 | 253333.33 |
| Gomez | (8,333.33) | 260000 | 251666.67 | 251666.67 |
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