Assume the Existing Capital of a Partnership Is $100,000

question 51

Multiple Choice

Assume the existing capital of a partnership is $100,000. Two partners currently own the partnership and split profits 40/60. A new partner is to be admitted and will contribute net assets with a fair value of $50,000. An appraisal of existing partnership assets indicates accounts receivable overstated by $10,000, inventory overstated by $12,000 and land understated by $25,000. What is the total capital of the new partnership if the bonus method is being used?

• A)$153,000
• B)$128,000
• C)$175,000
• D)$150,000

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