Asked by Surprise Bahati Mutunwa on Jul 24, 2024
Verified
Tom and Barb are partners who share profits and losses in the ratio of 6:4 for Tom and Barb, respectively. Their capital balances are $47,000 and $32,000, respectively. If Jane is admitted to the partnership for $28,000 for a one-fourth interest, her capital balance will be:
A) $35,667.
B) $15,000.
C) $28,000.
D) $26,750.
Capital Balance
The amount of money in a firm's capital account, reflecting the owner's initial investment plus retained earnings.
Profits and Losses
A financial statement that shows the revenue, costs, and expenses over a certain period, determining the company's net income or loss.
Admitted
In insurance, relates to insurers that are officially authorized to do business in a particular state.
- Ascertain and figure out the dissemination of profits and losses among partnership members in accordance with distinct arrangements and proportions.
- Learn about the financial outcomes of onboarding new partners into a partnership, with emphasis on capital infusions and the assessment of assets and liabilities brought into the partnership.
Verified Answer
AV
ARCHANA VISWAMJul 29, 2024
Final Answer :
C
Explanation :
Jane's capital balance will be $28,000 because that is the amount she contributes to the partnership for her one-fourth interest. The capital balance directly reflects the amount contributed by a new partner unless additional agreements or goodwill considerations are specified, which are not mentioned in this scenario.
Learning Objectives
- Ascertain and figure out the dissemination of profits and losses among partnership members in accordance with distinct arrangements and proportions.
- Learn about the financial outcomes of onboarding new partners into a partnership, with emphasis on capital infusions and the assessment of assets and liabilities brought into the partnership.