The Partners of Apple, Bere, and Carroll LLP Share Net

question 19

Multiple Choice

The partners of Apple, Bere, and Carroll LLP share net income and losses in a 5:3:2 ratio, respectively. The capital account balances on January 1, 2011, were as follows:

The carrying amounts of the assets and liabilities of the partnership are the same as their current fair values. Dorr will be admitted to the partnership with a 20% capital interest and a 20% share of net income and losses in exchange for a cash investment. The amount of cash that Dorr should invest in the partnership is:

• A) $25,000.
• B) $30,000.
• C) $37,500.
• D) $75,000.
• E) $90,000. ($150,000/.8=$187,500. $187,500 - $150,000 = $37,500 to invest)

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Definitions:

Hormones

Chemical messengers produced by endocrine glands that regulate various bodily functions by traveling through the bloodstream to target organs.

Complement

Group of serum proteins that stimulates phagocytosis and inflammation.

Classical Pathway

Part of the specific immune system for activation of complement.

C3

A protein component of the immune system's complement system, which enhances the ability of antibodies and phagocytic cells to clear pathogens from an organism.