Question

The Second Wind partnership has the following capital balances at the end of the year:
Dean                     180,000
Ed                           320,000
Ben                        120,000
Dan                        150,000
The partners share profits and losses 3:3:2:2, respectively. Dan retired and based on the partnership agreement was paid $200,000. Under the goodwill method, what are the capital balances of the remaining partners?

		Dean 255,000; Ed 395,000; Ben 195,000;
		Dean 255,000; Ed 395,000; Ben 170,000;
		Dean 161,250; Ed 301,250; Ben 107,500;
		Dean 198,750; Ed 338,750; Ben 132,500;
		None of the answers is correct The partners share profits and losses 3:3:2:2, respectively. Dan retired and based on the partnership agreement was paid $200,000. Under the Bonus method, what are the capital balances of the remaining partners? Dean 255,000; Ed 395,000; Ben 195,000; Dean 255,000; Ed 395,000; Ben 170,000; Dean 161,250; Ed 301,250; Ben 107,500; Dean 198,750; Ed 338,750; Ben 132,500; None of the answers is correct

Answer 1

Under the goodwill method, the new capital balances will be Dean 255,000; Ed 395,000; Ben 170,000;

Under the bonus method would be:

Dean 161,250; Ed 301,250; Ben 107,500;