Murphy and Reinartz have been partners for several years and critical values related to their partnership are as follows: In 2016, the partnership reported net income of $230,000, and each partner received a $100,000 distribution at year-end. After much discussion, Hepburn was admitted as a partner on January 1, 2017. Hepburn paid $70,000 for a 25% interest in capital. The

Murphy and Reinartz have been partners for several years and critical values related to their partnership are as follows:
Murphy and Reinartz have been partners for several years and

In 2016, the partnership reported net income of $230,000, and each partner received a $100,000 distribution at year-end. After much discussion, Hepburn was admitted as a partner on January 1, 2017. Hepburn paid $70,000 for a 25% interest in capital. The profit-sharing agreement was modified to also include a salary of $70,000 and a bonus of 5% of net income for Hepburn. The profit and loss percentages were also revised to 30%, 45%, and 25% for Murphy, Reinartz, and Hepburn, respectively. The partnership recognized income of $330,000 during 2017 and distributed $80,000 to each partner during the year. During 2017, Murphy became disappointed with the performance of the company and disagreed with Hepburn€™s management style. On January 1, 2018, Murphy sold its interest in the partnership to Reinartz for $200,000. The year 2018 was a transition year for the partnership, and Reinartz and Hepburn agreed to share annual profits of $200,000 equally between themselves. In 2018, Reinartz and Hepburn withdrew $60,000 and $80,000, respectively, from the partnership.
At
the beginning of 2019, Reinartz decided to sell its interest in the partnership to the partnership for $350,000. It was agreed that net assets would be adjusted to reflect their fair value and that the sale would be recorded by the method whereby only goodwill traceable to Reinartz would be recognized. It was agreed that the following net asset adjustments should be made:
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Murphy and Reinartz have been partners for several years and

Immediately after Reinartz sold its interest, Pioso purchased a 40% interest in the partnership by contributing to the partnership land and cash with a combined fair value of $75,000.
Required
Develop a worksheet that shows the various partners€™ capital balances from December 31, 2015, through the admission of Pioso. Note that if income is not sufficient to satisfy all provisions of the profit agreement, the profit and loss percentages are to be used to absorb any deficiencies.

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...
Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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...

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Related Book For answer-question

Advanced Accounting

11th edition

Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng

ISBN: 978-0538480284