Problem 14-24 The E.N.D. partnership has the following capital balances as of th

Question

Problem 14-24

The E.N.D. partnership has the following capital balances as of the end of the current year:

Assume that the partners share profits and losses 3:3:2:2, respectively. Fergie retires and is paid $246,000 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______

Gomes______

Assume that the partners share profits and losses 4:3:2:1, respectively. Pineda retires and is paid $295,000 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?

             Capital Balance

Adams ________

Fergie _________

Gomez_________

The E.N.D. partnership has the following capital balances as of the end of the current year:

Explanation / Answer

A. GOODWILL CALCULATION :

FERGIRE AMOUNT PAID 246000

LESS FERGIE CAPITAL (200000)

GOODWILL 46000

CAPTIALS OF

PINEDA = 240000-(46000*3/8) = 222750

ADAMS=210000- (46000*3/8) = 192750

GOMES=190000-(46000*2/8)=178500

B.total capital = $840000

capital after payment to the retiring partner =840000-295000= $545000 ( to be distributed in ratio of 3:2:1

adams = 545000*3/6=$272500

fergie= 545000*2/6=$181666.666

gomez 545000*1/6=$90833.33

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