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

question 1

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: $\begin{array} { | l | r | } \hline \text { Apple, capital } & \$ 25,000 \\\hline \text { Bere, capital } & 75,000 \\\hline \text { Carroll, capital } & 50,000 \\\hline \text { Total partners' capital } & \$ 150,000 \\\hline\end{array}$ 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.

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