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Rogers, Davis, and Smukalla Have Capital Balances of $50,000, $26,100

Question 43

Essay

Rogers, Davis, and Smukalla have capital balances of $50,000, $26,100, and $10,900, respectively. The partners share profits/losses equally.
Required:
Calculate Rogers' new capital balance resulting from each of the following independent situations:
Situation 1:
Smukalla sells his interest in the partnership to Rogers for $25,000.
Situation 2:
Meyers purchases a one-fourth interest from the partnership for $35,000. The bonus method is used to account for the incoming partner.
Situation 3:
The same as Situation 2 except that the goodwill method is used to account for the incoming partner.
Situation 4:
Davis sells her interest to the partnership for $30,000. The total amount of suggested goodwill is to be recorded.

Correct Answer:

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Situation 1:
Rogers' new capital balance...

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