Question - Smith, Thompson, and Nickels have a partnership. Their capital balances are $90,000, $130,000 and $150,000, respectively. They share profits and losses 25%, 35% and 40%, respectively. Foster wants to become a partner with a 10 percent share in partnership capital with a $60,000 cash contribution to the partnership. Appraisal of the partnership reveals that the assets of the partnership are fairly valued.
Required: Calculate Smith, Thompson, and Nickel's ending capital balances under the: (and all journal entries for both methods)
a. Bonus Method
b. goodwill method