A summary balance sheet for the Ash, Brown, and Curly partnership on December 31, 2014 is shown below. Partners Ash, Brown, and Curly allocate profit and loss in their respective ratios of 2:1:1

The partnership agreed to pay partner Brown $135,000 for his partnership interest upon his retirement from the partnership on January 1, 2015. The partnership financials on January 1, 2015 are:

Assets
Cash $ 75,000
Marketable securities 60,000
Inventory 85,000
Land 90,000
Building-net 110,000
Total assets $420,000

Equities
Ash, capital $210,000
Brown, capital 105,000
Curly, capital 105,000
Total equities $420,000

Required:
Prepare the journal entry to reflect Brown's retirement from the partnership:

1. Assuming a bonus to Brown.

2. Assuming a revaluation of total partnership capital based on excess payment.

3. Assuming goodwill equal to the excess payment is recorded.

Requirement 1
Ash and Curly give a bonus to Brown which reduces their capital in a 2 to 1 ratio.

Brown, capital 105,000
Ash, capital 20,000
Curly, capital 10,000
Cash 135,000
Requirement 2
Revalue the total partnership capital to reflect the value implied by Brown's retirement's excess payment of $30,000. Excess payment of $30,000 for 1/4 ownership implies goodwill of $30,000 / 25% = $120,000.

Goodwill 120,000
Ash, capital 60,000
Curly, capital 30,000
Brown, capital 30,000

Brown, capital 135,000
Cash 135,000

Requirement 3
Add goodwill equal to the excess payment

Brown, capital 105,000
Goodwill 30,000
Cash 135,000