Mace and Bowen Are Partners and Share Equally in Income

question 93

Multiple Choice

Mace and Bowen are partners and share equally in income or loss. Mace's current capital balance is $135,000 and Bowen's is $120,000. Mace and Bowen agree to accept Kent with a 30% interest in the partnership. Kent invests $115,000 in the partnership.
-The balances in Mace's and Bowen's capital accounts after admission of the new partner equal:

• A) Mace $133,000; Bowen $118,000.
• B) Mace $135,000; Bowen $124,000.
• C) Mace $137,000; Bowen $122,000.
• D) Mace $135,000; Bowen $120,000.
• E) Mace $139,000; Bowen $120,000.

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Definitions:

Debt

Debt refers to money borrowed by one party from another, under the condition that it is to be repaid, usually with interest.

Externality

An economic term referring to a cost or benefit incurred or received by a third party who has no control over how that cost or benefit was created.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with a company's goal of maximizing shareholder value.

Project Cash Flow

The net amount of cash and cash-equivalents being transferred into and out of a project, reflecting its operational activity and financial health.