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withdrawal of a partner in the lmk partnership luis 8217 s capital is 40 000 marty 8 733799

Withdrawal of a Partner

In the LMK partnership, Luis’s capital is $40,000, Marty’s is $50,000, and Karl’s is $30,000. They

share income in a 4:1:1 ratio, respectively. Karl is retiring from the partnership.

Required

Prepare journal entries to record Karl’s withdrawal according to each of the following independent

assumptions:

a. Karl is paid $38,000, and no goodwill is recorded.

b . Karl is paid $42,000, and only his share of the goodwill is recorded.

c. Karl is paid $35,000, and all implied goodwill is recorded.

d. Prepare a one paragraph note summarizing the guidance the U P A 1997 o f fers on computing the

buyout price for a partner who is retiring from the partnership.

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