On December 31, the capital balances and income ratios in Canasta Company are as follows. Instructions (a)

Question:

On December 31, the capital balances and income ratios in Canasta Company are as follows.

Capital Balance $100,000 51,000 25,000 Partner A. Heart L. Club B. Spade Income Ratio 60% 30 10

Instructions

(a) Journalize the withdrawal of Spade under each of the following independent assumptions.

(1) Each of the remaining partners agrees to pay $15,000 in cash from personal funds to purchase Spade’s ownership equity. Each receives 50% of Spade’s equity.

(2) Club agrees to purchase Spade’s ownership interest for $22,000 in cash.

(3) From partnership assets, Spade is paid $34,000, which includes a bonus to the retiring partner.

(4) Spade is paid $19,000 from partnership assets. Bonuses to the remaining partners are recognized.

(b) If Club’s capital balance after Spade’s withdrawal is $55,000, what were

(1) The total bonus to the remaining partners and

(2) The cash paid by the partnership to Spade?

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...