Retirement of Two Partners

Thirty years ago, five mechanics formed a partnership and established an automobile repair shop. Two of the partners, Decker and Groth, are now retiring. The other three partners, Farmer, Wang, and Lux, are continuing the partnership. The original agreement called for an equal division of income. The remaining partners plan to continue this arrangement. The following balance sheet is prepared for the partnership as of the retirement date:

Cash $208,000 Accounts payable $288,000 Accounts receivable 256,000 Loan payable 128,000 Inventory of parts 128,000 Capital - Decker 160,000 Equipment, net 288,000 Capital - Groth 128,000 Building, net 96,000 Capital - Farmer 224,000 Land 80,000 Capital - Wang 24,000 Capital - Lux 104,000 Total assets $1,056,000 Total liabilities and capital $1,056,000