Callie Is Admitted to the Adams & Beal Partnership Under

question 55

Multiple Choice

Callie is admitted to the Adams & Beal Partnership under the bonus method. Callie contributes cash of $20,000 and non-cash assets with a market value of $30,000 and book value of $15,000 in exchange for a 20% ownership interest in the new partnership. Prior to the admission of Callie, the capital of the existing partnership was $130,000 and an appraisal showed the partnership net assets were fairly stated. What will be Callie's initial capital balance?

• A)$36,000
• B)$50,000
• C)$35,000
• D)$30,000

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Definitions:

Income Statement

A report showcasing a corporation's financial results for a particular accounting cycle, which includes information on income, costs, and earnings.

Average Collection Period

The average number of days it takes for a company to receive payment after a sale has been made, indicating the efficiency of credit and collections policies.

Balance Sheet

A financial statement that displays a company’s assets, liabilities, and shareholders' equity at a specific point in time.

Income Statement

A financial statement that shows a company's revenues, expenses, and net income over a specific period, illustrating its financial performance.