Asked by DeAndra Kelly on Jul 20, 2024
Verified
Thao and Leslie are partners who share profits 60% and 40%. Their capital balances were both $120000 before Kiley was admitted to the partnership. Kiley contributed $160000 in cash to the partnership for a 30% interest.
Instructions
Compute the capital balances of Thao and Leslie after Kiley is admitted to the partnership.
Capital Balances
The amount of money that owners have invested in a company, plus any retained earnings or minus any losses.
Partnership
An authorized business setup in which a group of individuals jointly manage the operation and distribution of profits.
Profit Share
A portion of a company's profits allocated to its employees, shareholders, or partners, often as an incentive or reward.
- Examine the ramifications of integrating a new partner into a partnership by way of investment or acquiring a stake.
- Determine updated balances of capital accounts following the retirement or withdrawal of a partner.
Verified Answer
Leslie's capital balance: $120000 + {$160000 - [($240000 + $160000) ×.30]} × .40 = $136000
Learning Objectives
- Examine the ramifications of integrating a new partner into a partnership by way of investment or acquiring a stake.
- Determine updated balances of capital accounts following the retirement or withdrawal of a partner.
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