P, L, and O Are Partners with Capital Balances of $50,000

question 18

Multiple Choice

P, L, and O are partners with capital balances of $50,000, $30,000 and $20,000 and who share in the profit and loss of the PLO partnership 30%, 20%, and 50%, respectively, when they agree to admit C for a 20% interest.If C contributes $40,000 to the partnership and the goodwill method is used, what amount will be debited for goodwill?

• A) $15,000
• B) $20,000
• C) $25,000
• D) $28,000
• E) $60,000

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