Explanation Person C has his capital share as $80,000 and he has been paid $90,000 at the time of leaving. He has been paid unrecognized goodwill of $10,000. Calculate person M’s capital balance Person M's capital balance = $ 130 , 000 + $ 15 , 000 = $ 145 , 000 Working note: Calculate goodwill Goodwill = $ 10 , 000 × 10 2 = $ 50 , 000 Calculate share of goodwill among all the partners M's share of goodwill = $ 50 , 000 × 3 10 = $ 15 , 000 G's share of goodwill = <

Identify person M’s capital balance after person C withdraws after recognizing partnership goodwill .

Advanced Accounting

14th Edition

ISBN: 9781260247824

Author: Joe Ben Hoyle, Thomas F. Schaefer, Timothy S. Doupnik

Publisher: RENT MCG

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Concept explainers

Partnership Accounting

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm …

Partner Admission and Withdrawal

Question

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.

Chapter 14, Problem 13P

To determine

Identify person M’s capital balance after person C withdraws after recognizing partnership goodwill.

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Similar questions

The partnership of Tatum and Brook shares profits and losses in a 60:40 ratio respectively after Tatum receives a 10,000 salary and Brook receives a 15,000 salary. Prepare a schedule showing how the profit and loss should be divided, assuming the profit or loss for the year is: A. $40,000 B. $25,000 C. ($5,000) In addition, show the resulting entries to each partners capital account. Tatums capital account balance is $50,000 and Brooks is $60,000.
Arun and Margot want to admit Tammy as a third partner for their partnership. Their capital balances prior to Tammys admission are $50,000 each. Prepare a schedule showing how the bonus should be divided among the three, assuming the profit or loss agreement will be 1:3 once Tammy has been admitted and her contribution is: A. $20,000 B. $80,000 C. $50,000. In addition, show the resulting journal entries to each of the three partners capital accounts.

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