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In: Accounting

A summary balance sheet for the Ash, Brown, and Curly partnership on December 31, 2014 is...

A summary balance sheet for the Ash, Brown, and Curly partnership on December 31, 2014 is shown below. Partners Ash, Brown, and Curly allocate profit and loss in their respective ratios of 2:1:1. The partnership agreed to pay partner Brown $135,000 for his partnership interest upon his retirement from the partnership on January 1, 2015. The partnership financials on January 1, 2015 are:

Assets

Cash                                                              $ 75,000

Marketable securities                                 60,000

Inventory                                                        85,000

Land                                                                 90,000

Building-net                                                110,000

Total assets                                                $420,000

Equities

Ash, capital                                               $210,000

Brown, capital                                            105,000

Curly, capital                                              105,000

Total equities                                            $420,000

Required:

Prepare the journal entry to reflect Brown’s retirement from the partnership.

artnership:

1.    Assuming a bonus to Brown.

2.    Assuming a revaluation of total partnership capital based on excess payment.

3.    Assuming goodwill equal to the excess payment is recorded.

Solutions

Expert Solution

ekkarill92 answered 1 year ago
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