The HELP partnership has the following capital balances as of the end of the current year: Lennon

Question:

The HELP partnership has the following capital balances as of the end of the current year:

Lennon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $230,000

McCartney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190,000

Harrison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000

Starr . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140,000

Total capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . $720,000

Answer each of the following independent questions:

a. Assume that the partners share profits and losses 3:3:2:2, respectively. Harrison retires and is paid $190,000 based on the terms of the original partnership agreement. If the goodwill method is used, what is the capital balance of the remaining three partners?

b. Assume that the partners share profits and losses 4:3:2:1, respectively. Lennon retires and is paid $280,000 based on the terms of the original partnership agreement. If the bonus method is used, what is the capital balance of the remaining three partners?

Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...