REFERENCE: Ref.14_04
Peter,Roberts,and Dana have the following capital balances;$80,000,$100,000 and $60,000 respectively.The partners share profits and losses 20%,40%,and 40% respectively.
-Roberts retires and is paid $160,000 based on the terms of the original partnership agreement.If the goodwill method is used,what is the capital balance of Dana?

Question

Quizplus · Accepted Answer

Roberts receives an additional $60,000 above her capital balance.Since she is assigned 40 percent of all profits and losses,this extra allocation indicates total goodwill of $150,000,which must be split among all partners.
40% of Goodwill = $60,000
.40 G = $60,000
G = $150,000 and Dana receives 40% = $60,000.
Dana's balance = $60,000 + $60,000 = $120,000.

REFERENCE: Ref.14_04 Peter,Roberts,and Dana Have the Following Capital Balances;$80,000,$100,000 and $60,000 Respectively.The