Baxter is planning to retire from the partnership of Baxter, Helman, and Caines The partners ' income sharing ratio is 2 l l Helman and Caines will continue as a partnership, sharing profits and losses equally The partners are considering various ways to pay Baxter $90,000, which is the fair market...

Retirement Journal Entries Various Assumptions Capital Baxter 70000 Capital Helman 35000 Capital Cai ...

Baxter is planning to retire from the partnership of Baxter, Helman, and Caines. The partners' income-sharing ratio

Question:

Baxter is planning to retire from the of Baxter, Helman, and Caines. The partners' income-sharing ratio is 2: l: l. Helman and Caines will continue as a sharing profits and losses equally. The partners are considering various ways to pay Baxter $90,000, which is the fair market value of her interest in the business. Prior to retirement, Baxter's capital account balance is $70,000.
Required
Prepare the journal entry to record Baxter's retirement on the books under each of the following assumptions:
a. Helman and Caines each pay Baxter $45,000 from personal funds.
b. cash is used to pay Baxter. The bonus method is followed.
c. cash is used to pay Baxter. The total approach is followed.
d. cash is used to pay Baxter. The partial approach is followed.
e. Helman and Caines each pay Baxter $10,000 from personal funds; the rest is paid with cash. Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... 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...