On December 31, the capital balances and income ratios in TEP Companyare as follows.
| Partner | Capital Balance | Income Ratio |
| Brayer | $60,000 | 50% |
| Emig | 40,000 | 30% |
| Posada | 30,000 | 20% |
Instructions
- Journalize the withdrawal of Posada under each of the following assumptions.
- Each of the continuing partners agrees to pay $18,000 in cash from personal funds to purchase Posada"s ownership equity. Each receives 50% of Posada"s equity.
- Emig agrees to purchase Posada"s ownership interest for $25,000 cash.
- Posada is paid $34,000 from partnership assets, which includes a bonus to the retiring partner.
- Posada is paid $22,000 from partnership assets, and bonuses to the remaining partners are recognized.
- If Emig"s capital balance after Posada"s withdrawal is $43,600, what were (1) the total bonus to the remaining partners and (2) the cash paid by the partnership to Posada?
Solution
a.
b.
