assume the partnership of Murphy, Henderson, and Davey has been in existence for several years. Murphy decides to withdraw from the partnership when the partners capital balances are as follows:

Partner. capital balance profit and loss ratio

Murphy $120,000 4

Henderson 30,000 3

Davey 50,000 2

An appraisal of the business and its net assets estimates the fair value to be $308,000. land with a book value of $40,000 has a fair value of $70,000. Murphy has agreed to receive $168,000 in exchange for her partnership interest.

Required:

A) Prepeare the journal entries for the dissolution of Murphy's partnership interest, assuming the goodwill method is to be applied.

B) What are the remaining partner's capital balances after Murphy's interest is dissolved, assuming the goodwill method is applied