Letterman and Conan Are Partners Who Share Profits and Losses

question 3

Multiple Choice

Letterman and Conan are partners who share profits and losses 3:7. The capital accounts on January 1, 2017, are $120,000 and $160,000, respectively. Leno is to be admitted as a partner with a one-fourth interest in the capital and profits and losses by investing $80,000. Goodwill is not to be recorded. The capital balances after admission should be:

• A) Letterman, $117,000; Conan, $153,000; Leno, $90,000
• B) Letterman, $120,000; Conan, $160,000; Leno, $90,000
• C) Letterman, $123,000; Conan, $160,000; Leno, $80,000
• D) Letterman, $120,000; Conan, $167,000; Leno, $80,000

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Definitions:

Capability

The ability or attributes required to perform tasks or achieve certain results effectively.

Stock-Trading Algorithm

A set of rules or procedures designed to automatically guide the buying and selling of stocks in the financial markets.

Investment

The allocation of resources, usually money, in the expectation of generating an income or profit.

Fraud

A deliberate deception practiced to secure unfair or unlawful gain, often involving financial transactions.