The ABCD Partnership Has the Following Balance Sheet at January

question 43

Essay

The ABCD Partnership has the following balance sheet at January 1, 2010, prior to the admission of new partner, Eden.

Eden acquired a 20% interest in the partnership by contributing a total of $71,500 directly to the other four partners. No goodwill is to be recorded. Profits and losses have previously been split according to the following percentages: Adams, 15%, Barnes, 35%, Cordas, 30%, and Davis, 20%. After Eden made his investment, what were the individual capital balances?

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Definitions:

Industrialized Nations

Countries that have highly developed industries, infrastructure, and advanced technological capabilities, resulting in a high standard of living.

Capitalism

An economic system characterized by private or corporate ownership of capital goods, by investments determined by private decision, and by prices, production, and the distribution of goods determined mainly by competition in a free market.

Command Economy

An economic system where key economic decisions, such as allocation and distribution of resources, are made by the government.

Production

The process of creating, manufacturing, or producing goods and services.