Response to the following problem:
After the books are closed, Echols & Schaeffer's partnership balance sheet reports capital of $60,000 for Echols and $90,000 for Schaeffer. Echols is withdrawing from the firm. The partners agree to write down partnership assets by $40,000. They have shared profits and losses in the ratio of 1/4 to Echols and 3/4 to Schaeffer. The partnership agreement states that a withdrawing partner will receive assets equal to the book value of his owner's equity.
1. How much will Echols receive? Schaeffer will continue to operate the business as a proprietorship.
2. What is Schaeffer's beginning capital on the proprietorship books?