Use the Following Information to Answer the Question(s) Below

question 5

Multiple Choice

Use the following information to answer the question(s) below.

A summary balance sheet for the Lemon, Mango, and Nobb partnership appears below. Lemon, Mango, and Nobb share profits and losses in a ratio of 2:3:5, respectively.
The partners agree to admit Oran for a one-fifth interest. The fair market value of partnership land is appraised at $200,000 and the fair market value of inventory is $175,000. The assets are to be revalued prior to the admission of Oran and there is $30,000 of goodwill that attaches to the old partnership.

-By how much will the capital accounts of Lemon,Mango,and Nobb increase,respectively,due to the revaluation of the assets and the recognition of goodwill?

• A)The capital accounts will increase by $50,000 each.
• B)The capital accounts will increase by $60,000 each.
• C)$36,000,$54,000,and $90,000
• D)$40,000,$50,000,and $60,000

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Definitions:

Cognitive Algebra

A theoretical concept indicating how people integrate information to make judgments and decisions, often using metaphorical mathematical operations such as addition and subtraction.

Balance Theory

A psychological theory suggesting that individuals strive for consistency among their beliefs, attitudes, and sentiments in a triadic relationship.

Triad

In social sciences, a group or relationship that involves three entities, which can significantly differ in dynamics from dyads (two entities).

Two-Component Model

A theory or framework that divides a concept or phenomenon into two distinct parts for better understanding or analysis.