The partnership balance sheet of John and Peter were closed, after closing the books. The balance sheet report owners’ equity of $42,500 for John and $58,000 for Peter. John is withdrawing from the partnership. John and Peter had agree to write down the partnership assets by $24,000. They shared profit and losses in the ratio 1/3 to John and 2/3 to Peter. The partnership agreement stipulates that a partner withdrawing from the partnership will receive assets equal to the book value of his owners’ equity.

1. How much will John receive?

2. Peter will continue to operate the business as a proprietorship. What is Peter beginning capital on the proprietorship books?