Note: This Is a Kaplan CPA Review Question

question 52

Multiple Choice

Note: This is a Kaplan CPA Review Question
James Dixon, a partner in an accounting firm, decided to withdraw from the partnership. Dixon's share of the partnership profits and losses was 20%. Upon withdrawing from the partnership he was paid $74,000 in final settlement for his interest. The total of the partners' capital accounts before recognition of partnership goodwill prior to Dixon's withdrawal was $210,000. After his withdrawal the remaining partners' capital accounts, excluding their share of goodwill, totaled $160,000. The total agreed upon goodwill of the firm was

• A) $250,000.
• B) $140,000.
• C) $160,000.
• D) $120,000.

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Definitions:

Working Relationships

The interactions and connections formed between colleagues, supervisors, and employees in a professional setting.

Implementation

The process of executing and applying methods, plans, or policies to achieve desired outcomes effectively.

Division of Work

The process of breaking down a job into a series of smaller tasks that are assigned to various individuals, aiming to improve efficiency and expertise.

Vertical Layers

The hierarchical levels within an organization, usually denoting the levels of management from executives at the top to lower-level employees.