Problem 2

A, Capital 10,500
B, Capital 7,000
C, Capital 105,000
Cash 140,000

Problem 3

(1) Since a debit was made to Agler’s capital account, a bonus was paid to the retiring
partner of
$80,000 (5/8 goodwill = $50,000), resulting in a total payment to Colter of $230,000.
The entry
would be:
Agler, Capital 50,000
Bates, Capital 30,000
Colter, Capital 150,000
Cash 230,000
(2) Under the partial goodwill approach, only the goodwill attributed to the retiring
partner is
recorded. Thus, the payment to Colter was $210,000 ($150,000 + $60,000).
(3) Since $66,000 was credited, total goodwill of $220,000 ($66,000/0.3) is recorded.
Colter is
allocated $44,000 ($220,000 × 0.20). Thus, the payment to Colter was $194,000
($150,000 +
$44,000).