Problem

At year-end, the Circle City partnership has the following capital balances: Manning, C...

At year-end, the Circle City partnership has the following capital balances:

Manning, Capital

$130,000

Gonzalez, Capital

110,000

Clark, Capital

80,000

Freeney, Capital

70,000

Profits and losses are split on a 3:3:2:2 basis, respectively. Clark decides to leave the partnership and is paid $90,000 from the business based on the original contractual agreement.

Using the goodwill method, what is Manning’s capital balance after Clark withdraws?

a. $133,000,

b. $137,500.

c. $140,000.

d. $145,000.

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