The capital balances for the partnership of Diaz, Isidro, and Nelson are as follows: Capital-Diaz $1,500,000...

 

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The capital balances for the partnership of Diaz, Isidro, and Nelson are as follows: Capital-Diaz $1,500,000 Capital-Isidro Capital-Nelson 900,000 600,000 The partners share income in a 2:4:4 ratio. Nelson decides to retire. Diaz and Isidro continue the partnership, sharing income in a 2:4 (1:2) ratio. Required Prepare the journal entry or entries to record the retirement of Nelson in each of the following scenarios: a. Diaz and Isidro use their personal assets to buy Nelson's interest for $800,000. Description Debit Credit Capital-Nelson 600,000 Goodwill 200,000 Capital-Isidro 0 800,000 b. The partners agree to pay Nelson $750,000 of partnership cash. The bonus method is used. Description Debit Credit Capital-Diaz Capital-Nelson Cash To record retirement bonus to Nelson. To record retirement payment to Nelson. c. Same as b., but the partial goodwill approach is used. Description Debit Credit To record partial goodwill. To record retirement payment to Nelson. d. Same as b., but the total goodwill approach is used. Description Debit Credit Capital-Diaz Capital-Isidro To record total goodwill To record retirement payment to Nelson. e. The partners agree to pay Nelson $450,000 of partnership cash. The difference is attributed to overvalued plant and equipment, and the total goodwill approach is used. Description Debit Credit Capital-Diaz Capital-Isidro To record difference attributed to overvalued land. To record retirement payment to Nelson. The capital balances for the partnership of Diaz, Isidro, and Nelson are as follows: Capital-Diaz $1,500,000 Capital-Isidro Capital-Nelson 900,000 600,000 The partners share income in a 2:4:4 ratio. Nelson decides to retire. Diaz and Isidro continue the partnership, sharing income in a 2:4 (1:2) ratio. Required Prepare the journal entry or entries to record the retirement of Nelson in each of the following scenarios: a. Diaz and Isidro use their personal assets to buy Nelson's interest for $800,000. Description Debit Credit Capital-Nelson 600,000 Goodwill 200,000 Capital-Isidro 0 800,000 b. The partners agree to pay Nelson $750,000 of partnership cash. The bonus method is used. Description Debit Credit Capital-Diaz Capital-Nelson Cash To record retirement bonus to Nelson. To record retirement payment to Nelson. c. Same as b., but the partial goodwill approach is used. Description Debit Credit To record partial goodwill. To record retirement payment to Nelson. d. Same as b., but the total goodwill approach is used. Description Debit Credit Capital-Diaz Capital-Isidro To record total goodwill To record retirement payment to Nelson. e. The partners agree to pay Nelson $450,000 of partnership cash. The difference is attributed to overvalued plant and equipment, and the total goodwill approach is used. Description Debit Credit Capital-Diaz Capital-Isidro To record difference attributed to overvalued land. To record retirement payment to Nelson.

Answer rating: 100% (QA)

Answer SOLUTION Particulars Debit Credit a Capital Nelson 600000 Capital Diaz 2... View the full answer