Asked by alexis marie logan on Jun 11, 2024
Verified
Lambert invests $20,000 for a 1/3 interest in a partnership in which the other partners have capital totaling $34,000 before admitting Lambert. After distribution of the bonus, what is Lambert's capital?
A) $18,000
B) $20,000
C) $6,667
D) $11,333
Capital Totaling
The sum of an entity's financial resources, including equity, debt, and other financial instruments, used to fund its operations and investments.
Distribution
The process of delivering products or services from the producer to the intended users.
Bonus
Additional compensation given to employees as a reward for their performance, often beyond their regular earnings.
- Understand the effects of admitting a new partner on existing partners' capital accounts and the partnership's total capital.
Verified Answer
NA
NOOR AZLINA ABDULLAHJun 15, 2024
Final Answer :
A
Explanation :
Lambert's $20,000 investment for a 1/3 interest implies the total capital after his investment should be $60,000 (since $20,000 is 1/3 of $60,000). The other partners had $34,000 before Lambert joined. After Lambert's investment, the total capital increased to $54,000 ($34,000 + $20,000). To adjust for Lambert's 1/3 interest, his capital is considered as $18,000 after distributing the bonus, making the total $54,000 align with the implied total value of $60,000 for a 1/3 interest.
Learning Objectives
- Understand the effects of admitting a new partner on existing partners' capital accounts and the partnership's total capital.