Ulysses, Grey, and Carter are partners with capital balances of $80,000, $200,000, and $120,000 respectively.

Profits an
are shared in a 3:2:1 ratio. Grey decided to withdraw and the partnership revalued its assets. The value of inventory wa
decreased by $20,000 and the value of land was increased by $50,000. The partnership then agreed to pay Grey $230,0
withdrawal from the partnership. Required: Prepare the journal entry to record Greys withdrawal under the: A. bonus m
full goodwill method

Solution:

Journal Entry to Record Revaluation of Partnership' s Assets

Net Revaluation: = -20000+50000

$30,000

Net Assets $30,000

Ulysses, Capital $15,000
Grey, Capital $10,000
Carter Capital $5,000

OR
Land $50,000
Ulysses, Capital $10,000
Grey, Capital $6,667
Carter Capital $3,333
Inventory $20,000
Ulysses, Capital $25,000
Grey, Capital $16,667
Carter Capital $8,333

A) Journal Entry to record Withdrawel using bonus Method

Grey, Capital $210,000

Ulysses, Capital $15,000
Carter Capital $5,000
Cash $230,000

B) Journal Entry to record withdrawal using full goodwill method

Good Will (20000/(2/6)) $60,000

Ulysses, Capital $30,000
Grey, Capital $20,000
Carter Capital $10,000

Grey, Capital $230,000

Cash $230,000
Good Woll 240000

c capital 200000
60000
20000
cash
 0 respectively. Profits and losses
The value of inventory was
greed to pay Grey $230,000 for his
wal under the: A. bonus method B.