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Problem $14-1(LO2,3,5,6$ Admission and departure of partners under the $9_0.$

will method. Carlton. Weber, and Stansbury share profits equally and have capital balanges

$2015,$ Stansbury has transferred his interest in the par the partnership, the profit$-$ and loss$-$sharing

annual salaries of $$120,000,$$$90,000,$ and

agreement was modified as follows:

a$.$ Carlton, Weber, and Laidlaw would receive amounts at the end of each calendar quarter.

$$90,000,$ respectively, to be withdrawn in equil we we allocated between Weber and Laidl ${?}_{aw}$

b$.$ A bonus of $20\%$ of net income after the distributed at the end of the first quarter subsequent

in the ratio of $1$:$3.$ The bonus woul

to year$-$end.

c$.$ Profit and loss percentages are $40\%,$ exists, all provisions of the profit$-$sharing

Laidlaw.

d$.$ If income is not sufficient or an operating lose percentages are used to absorb any defi$-$

agreement are to be satisfied ciency or additional losses.

The original partners were excited about the new arrangement because Laidlaw had indi$-$

cated that they would be able to attract a number of customers from his previous place of

employment. Weber was willing to shift some salary to a bonus status in order to captured over the first six months of

$2015,$ a number of Laidlaw's previous customers $12$ months were very disappointing. Not only did very few additional Laid$-$

law customers transfer their business, but it became clear that Laidlaw was not compatible with

the other partners. Furthermore, a number of long$-$standing customers ceased doing business

with the company due to issues with Laidlaw. Income for the year $2015$ was $$300,000,$ and

income for the first six months of $2016$ was only $$120,000.$

On July $1,2016,$ Carlton and Weber agreed to acquire Laidlaw's interest in the partnership.

The transaction would be recorded as a purchase of Laidlaw's interest by the partnership under

the bonus method. Laidlaw was paid $$79,000$ for their capital balance as of June $30,2016,$ and

no other distributions were made to him.

After Laidlaw left the partnership, Carlton and Weber went back to sharing profits and

losses equally with quarterly withdrawals of $$10,000$ per partner at the end of each calendar

quarter. Weber agreed not to receive an additional distribution traceable to the bonus earned

during the first six months of $2016.$ Income in the second half of $2016$ was $$73,000.$ However,

the partners realized that they needed to expand operations if the company was to be saved. On

January $1,2017,$ the partnership admitted Wilson. Wilson contributed tangible assets of

$$70,000$ and intangibles to the partnership in exchange for a $40\%$ interest in capital and one$-$

third interest in profits. The admission of Wilson was recorded using the goodwill method.

Carlton, Weber, and Wilson continued to share profits equally, and the partnership experienced

net income of $$420,000$ in $2017.$ Quarterly withdrawals of $$30,000$ were paid to each of the

partners beginning in $2017.$

During the first six months of $2018,$ the partnership had net income of $$255,000$ in spite of Carlton's reduced invlovement due to health problems. On July $12018,$ Carlton sold his interest to partnership for $$160,000.$ The sale was recorede by recognizing the goodwill traceable to the entire partnership.

prepare a schedule analyzing the change in partnerships' capital accounts since December $31,2014.$ Supporting calculations should be in good form.

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