Problem 14-24 (LO 14-10) The E.N.D. partnership has the following capital balanc
ID: 2473386 • Letter: P
Question
Problem 14-24 (LO 14-10)
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 4:3:2:1, respectively. Pineda retires and is paid $305,000 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?
Assume that the partners share profits and losses 4:3:2:1, respectively. Pineda retires and is paid $305,000 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?
Problem 14-24 (LO 14-10)
The E.N.D. partnership has the following capital balances as of the end of the current year:
Pineda $ 160,000 Adams 140,000 Fergie 130,000 Gomez 120,000 Total capital $ 550,000 b.
Assume that the partners share profits and losses 4:3:2:1, respectively. Pineda retires and is paid $305,000 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?
Assume that the partners share profits and losses 4:3:2:1, respectively. Pineda retires and is paid $305,000 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?
Explanation / Answer
The payment on the retirement of Pineda would be :
Debit Pineda Capital Account $160000
Debit Adams Capital $72500
Debit Fergie Capital $48333
Debit Gomez Capital $24167
Credit Cash $305000
So, the capital balance of the remaining three partners =
Adams Capital = 140000 - 72500 = $67500
Fergie Capital = 130000 - 48333 = $81667
Gomez Capital = 120000 - 24167 = $95833