7. On June 30, 2016, the balance sheet for the partnership of Wil, Bro, and Low, together with their respective profit and loss ratios, is summarized as follows:

Assets, at cost $300,000 Wil loan $15,000 Wil capital (20%) 70,000 Bro capital (20%) 65,000 Low capital (60%) 150,000

$300,000 Wil has decided to retire from the partnership, and by mutual agreement the assets are to be adjusted to their fair value of $360,000 at June 30, 2016. It is agreed that the partnership will pay Wil $102,000 cash for his partnership interest exclusive of his loan, which is to be repaid in full. Goodwill is to be recorded in this transaction, as implied by the excess payment to Wil. After Wil’s retirement, what are the capital account balances of Bro and Low, respectively?

a $65,000 and $150,000 b $97,000 and $246,000 c $73,000 and $174,000 d $77,000 and $186,000 E 16-19 Statement of partner’s capital Financial information for the Park, Lee, and Jeon partnership for 2016 is summarized below:

Park (30%) Lee (30%) Jeon (40%)

Capital balance January 1, 2016 $100,000 $120,000 $180,000 Addition (drawing):

July 1, 2016 10,000 — 15,000 October 1, 2016 (12,000) (12,000) (12,000)

In accordance to the partnership agreement, the net income is to be divided as follows:

■ Bonus equal to 10 percent of net income to Park

■ Salary allowance of $12,000 to Park and $5,000 to Lee

■ 10 percent of interest on beginning capital balance

■ Remaining profits to be divided according to profit-sharing agreement Total capital balance on December 31, 2016, was $461,000.

REQuIRED: Prepare a statement of each partner’s capital for the year ended December 31, 2016.