Question

In the ABC partnership (to which Daniel seeks admittance), the capital balances of Albert, Bert, and Connell, who share income in the ratio of 5:3:2 are:
Albert 500000
Bert 300000
Connell 200000

Based on the preceding information, if no goodwill or bonus is recorded, how much should Daniel invest for a 20 percent interest?
A. $400,000
B. $200,000
C. $300,000
D. $250,000

Answer 1

Answer:

D. $ 250,000

Explanation:

The total capital of Albert, Bert and Conell is:

$500000 + $300000 + $200000 = $1000000

given that Daniel will have 20% share in partnership.

So total capital of the partnership after admission of Daniel will be calculated as follows:

($1000000×100)/80 = $ 1250000

Daniel will invest:

$1250000 – $1000000 = $250,000