P, L, and O Are Partners with Capital Balances of $50,000

question 18

Multiple Choice

P, L, and O are partners with capital balances of $50,000, $30,000 and $20,000 and who share in the profit and loss of the PLO partnership 30%, 20%, and 50%, respectively, when they agree to admit C for a 20% interest.If C contributes $40,000 to the partnership and the goodwill method is used, what amount will be debited for goodwill?

• A) $15,000
• B) $20,000
• C) $25,000
• D) $28,000
• E) $60,000

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Definitions:

Vas Deferens

A duct that conveys sperm from the testicle to the urethra, playing a crucial role in male reproductive system.

Sebaceous Cysts

Noncancerous, closed pockets of tissue filled with fluid or other material, often found on the skin.

Scrotum

an external sac of skin that encloses the testicles in males, regulating temperature for sperm production.

Epididymis

A tightly coiled tube situated at the back of the testicle that stores and carries sperm.