On December 31, the capital balances and income ratios in Canasta Company are as follows.
|
Partner |
Capital Balance |
Income Ratio |
|
A. Heart |
$100,000 |
60% |
|
L. Club |
51,000 |
30 |
|
B. Spade |
25,000 |
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?