The E.N.D. partnership has the following capital balances as of the end of the current year: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 $190,000 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 $280,000 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? Pineda....$230,000Adams....Fergie ...Gomez.Total capital....160,000140,000$720,000

Under the bonus method, the total capital investment is calculated by adding the investment of new…

Answered: Pineda.... $230,000 Adams.... Fergie…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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

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 $190,000 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 $280,000 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?

Pineda....
$230,000
Adams....
Fergie ...
Gomez.
Total capital....
160,000
140,000
$720,000

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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