E 16-14 Partnership retirement—revaluation and nonrevaluation The capital account balances and profit-sharing ratios of the Akamu, Nani, Kalena, and Maile partnership on December 31, 2016, after closing entries are as follows:

Akamu (20%) $55,000 Nani (30%) 75,000 Kalena (30%) 80,000 Maile (20%) 60,000 Total capital $270,000 Akamu is retiring from the partnership on 1 January 2017, and the partners agree that he will receive a cash payment of $70,000 in final settlement of his interest. The book value of partnership net assets is equal to fair value, except for equipment with a book value of $25,000 and a fair value of $30,000.

REQuIRED 1. Prepare journal entries to record Akamu’s retirement assuming that his share of assets are revalued.

2. Prepare journal entries to record Akamu’s retirement assuming that total partnership capital is revalued.

3. Prepare journal entries to record Akamu’s retirement assuming the bonus approach is used.

554 CHAPTER 16