23.

Partner Retirement: Various Cases

The capital balances for the partnership of Diaz, Isidro, and Nelson are as follows:

CapitalDiaz	$1,500,000
CapitalIsidro	900,000
CapitalNelson	600,000

The partners share income in a 2:4:4 ratio. Nelson decides to retire. Diaz and Isidro continue the partnership, sharing income in a 2:4 (1:2) ratio.

Required

Prepare the journal entry or entries to record the retirement of Nelson in each of the following scenarios:

a. Diaz and Isidro use their personal assets to buy Nelsons interest for $800,000.

Description	Debit	Credit
Capital-Nelson
Capital-Diaz
Capital-Isidro

b. The partners agree to pay Nelson $750,000 of partnership cash. The bonus method is used.

Description	Debit	Credit
Capital-Diaz
To record retirement bonus to Nelson.
To record retirement payment to Nelson.

c. Same as b., but the partial goodwill approach is used.

Description	Debit	Credit
To record partial goodwill.
To record retirement payment to Nelson.

d. Same as b., but the total goodwill approach is used.

Description	Debit	Credit
Capital-Diaz
Capital-Isidro
To record total goodwill.
To record retirement payment to Nelson.

e. The partners agree to pay Nelson $450,000 of partnership cash. The difference is attributed to overvalued plant and equipment, and the total goodwill approach is used.

Description	Debit	Credit
Capital-Diaz
Capital-Isidro
To record difference attributed to overvalued land.
To record retirement payment to Nelson.

Please answer all parts of the question.