Portney, Gray, and Ross are partners with principal balances of $80,000, $200,000, and $120,000, respectively. Profits and
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Question:
Portney, Gray, and Ross are partners with principal balances of $80,000, $200,000, and $120,000, respectively. Profits and losses are shared in a 3:2:1 ratio. Gray decided to retire and the company revalued its assets. The value of the inventory decreased by $20,000 and the value of the land increased by $50,000. Portney and Ross then agreed to pay Gray $230,000 for his withdrawal from the partnership.
Required :
Prepare the journal entry to record the retirement of Gray under the
A. bonus method.
B. full goodwill method.
Expert Answer:
A Bonus Method Under the bonus method the retiring partner receives a bonus or goodwill payment based on the agreed amount The bonus is allocated to the remaining partners based on their profit and lo... View the full answer
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