Yearend drawing account balances were $15,000 for Kathy and $10,000 for Eddie. Invested an additional $5,000 during the year to finance a special purchase.

Partnership net income for 2011 was $30,000. Eddie is provided an annual salary of $15,000 with no bonus. Capital account balances on January 1, 2011, were as follows: Kathy $496,750 Eddie $268,250 The partnership agreement provides Kathy with an annual salary of $10,000 plus a bonus of 5 percent of partnership net income for managing the business.

Lynn capital ($100,000 + $20,000 - $5,000)Į 16-13 : Partnership income allocation-Salary allowance, bonus, and additional contributions during the year Kathy and Eddie formed the K & E partnership several years ago. Solution : Entry to write-up assets to fair value AssetsĮntry to record settlement with Dee : Dee capitalīeck capital (5/6 $30,000 excess payment) 25,000 Lynn capital (1/6 $30,000 excess payment) 5,000 Dee loanīeck capital ($300,000 + $100,000 - $25,000) R E Q U I R E D : Determine the capital balances of Beck and Lynn immediately after Dee’s retirement. The bonus approach is used therefore, no goodwill is recorded. The partners agree that partnership assets, excluding Dee’s loan, should be adjusted to their fair value of $1,000,000 and that Dee should receive $310,000 for her capital balance net of the $100,000 loan. Nix capital $170,000 Cash $170,000 ( Untuk mencatat pembayaran ke Nix saat pensiun.) E16-12 : Partner retirement entries-Fair value adjustment A balance sheet at December 31, 2011, for the Beck, Dee, and Lynn partnership is summarized as follows: Assetsĭee is retiring from the partnership.

Untuk mencatat goodwill yang tersirat oleh kelebihan pembayaran ke Nix dihitung sebagai berikut : ($170,000 - $128,000)/30% = $140,000. R E Q U I R E D : Prepare the journal entry or entries to record Nix’s retirement assuming that goodwill, as implied by the payment to Nix, is recorded on the partnership books Solution : Retirement of Nix with revaluation: Goodwill On January 2, 2012, Nix is paid $170,000 cash upon his retirement. E 16-11 : Partner retirement entries Capital balances and profit and loss sharing ratios for the Nix, Man, and Per partnership on Decembefore the retirement of Nix, are as follows: Nix capital (30%)

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