The Partnership of Gilligan, Skipper, and Ginger Had Total Capital

question 6

Multiple Choice

The partnership of Gilligan, Skipper, and Ginger had total capital of $570,000 on December 31, 2014 as follows: $\begin{array}{lr}\text { Gilligan, Capital (30\%) } & \$ 180,000 \\\text { Skipper, Capital (45\%) } & 255,000 \\\text { Ginger, Capital (25\%) } & 135,000 \\\text { Total }&\$570,000\end{array}$ Profit and loss sharing percentages are shown in parentheses.
Assume that Professor became a partner by investing $190,000 in the Gilligan, Skipper, and Ginger partnership for a 25 percent interest in the capital and profits, and the partnership assets are revalued.Under this assumption

• A)Professor's capital credit will be $150,000.
• B)Gilligan's capital will be increased to $147,000.
• C)total partnership capital after Professor's admission to the partnership will be $600,000.
• D)net assets of the partnership will increase by $190,000, including Professor's interest.

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Definitions:

Short-Term Debt

Loans or borrowings that are due for repayment within a short timeframe, typically within one year, used for immediate financing needs.

Retained Earnings

The portion of net income not distributed as dividends to shareholders, but retained by the company for reinvestment.

MACRS 3-Year Class

A category under the Modified Accelerated Cost Recovery System (MACRS) for depreciating certain types of business property over three years.

Amortized

Amortization is the process of spreading out a loan into a series of fixed payments over time, covering both principal and interest.