Question
Nunes, Orta and Paulo are partners providing engineering services. Relevant data regarding income-sharing relationships and capital balances are as follows: Partner Capital Balance Income Share
Nunes, Orta and Paulo are partners providing engineering services. Relevant data regarding income-sharing relationships and capital balances are as follows:
Partner | Capital Balance | Income Share |
Nunes | $ 250,000 | 20% |
Orta | 180,000 | 30% |
Paulo | 150,000 | 50% |
Totals | $ 580,000 | 100% |
Nunes retires and receives $220,000 in cash from the partnership. Partnership net assets are recorded at amounts approximating fair value, except its equipment, currently reported at $500,000, is overvalued.
If the total goodwill approach is used, Orta's capital account after Nunes' retirement is:
| A. | $180,000 | |
| B. | $225,000 | |
| C. | $123,750 | |
| D. | $135,000 |
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Advanced Accounting
Authors: Floyd A. Beams, Joseph H. Anthony, Bruce Bettinghaus, Kenneth Smith
11th Edition
978-0132568968, 9780132568968
