The Partnership of Gilligan,Skipper,and Ginger Had Total Capital of $570,000

question 20

Multiple Choice

The partnership of Gilligan,Skipper,and Ginger had total capital of $570,000 on December 31,2017 as follows: Profit and loss sharing percentages are shown in parentheses.The partnership has no liabilities.If Mary Ann purchases a 25 percent interest from each of the old partners for a total payment of $270,000 directly to the old partners

• A)total partnership net assets can logically be revalued to $1,080,000 on the basis of the price paid by Mary Ann.
• B)the payment of Mary Ann does not constitute a basis for revaluation of partnership net assets because the capital and income interests of the old partnership were not aligned.
• C)total capital of the new partnership should be $760,000.
• D)total capital of the new partnership will be $840,000 assuming no revaluation.

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Definitions:

Annual Dividend

Annual dividend refers to the total dividend payment a shareholder receives per share of stock owned in a company over the course of a year.

Rate of Return

The outcome, whether gainful or not, of an investment throughout an established period, expressed as a percentage of the investment's purchase cost.

Annual Dividend

A financial distribution made by a corporation to its shareholders, usually once or multiple times a year, from its earnings.

Increase by

To grow or expand in value or size by a certain amount or percentage.