Question:
Partners Q, X, and Y share net income and losses in a 5:3:2 ratio respectively. The capital account balances on April 30, Year 5 are as follows:
W Capital | $37,000 |
X Capital | $65,000 |
Y Capital | $48,000 |
Total partners’ capital | $150,000 |
The assets and liabilities of the partnership are recorded at their fair values. Z is to be admitted to the partnership with a 20% capital interest and a 20% share of net income and losses in exchange for a cash investment. No goodwill or bonus is to be recorded. The amount that the Partner Z should invest in the partnership is:
a) $37,500
b) $40,000
c) $30,000
d) $36,000
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