Donald, Anne, and Todd have the following capital balances; $40,000, $50,000 and $30,000 respectively.The partners share profits and losses 20%, 40%, and 40% respectively.Anne retires and is paid $80,000 based on an independent appraisal of the business.If the goodwill method is used, what is the capital of the remaining partners?

Question

Quizplus · Accepted Answer

The goodwill is $80,000 - $50,000 = $30,000. Donald's capital is $40,000 + (20% x $30,000) = $55,000. Todd's capital is $30,000 + (40% x $30,000) = $60,000.

Donald, Anne, and Todd Have the Following Capital Balances; $40,000