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.What is the total partnership capital after Roberts retires receiving $160,000 and using the goodwill method?
A) $290,000.
B) $176,000.
C) $ 80,000.
D) $120,000.
E) $230,000.

Question

Quizplus · Accepted Answer

When Roberts retires, he receives $160,000, which is $60,000 more than his capital balance of $100,000. This excess is considered goodwill. The total partnership capital before Roberts retires is $240,000 ($80,000 + $100,000 + $60,000). After paying Roberts $160,000, the remaining capital is $80,000. Adding the goodwill of $60,000 to the remaining capital gives a total partnership capital of $230,000.

Peter, Roberts, and Dana Have the Following Capital Balances; $80,000