The capital account balances for Ray & Randall LLP on May 31, 2013, were as foll
ID: 2421577 • Letter: T
Question
The capital account balances for Ray & Randall LLP on May 31, 2013, were as follows:
Ray, capital $210,000
Randall, capital 110,000
Ray and Randall shared net income and losses in the ratio of 3:2, respectively. The partners agreed to admit Appleton to the partnership with a 35% interest in partnership capital and net income. Appleton invested $80,000 cash, and no goodwill was recognized.
Prepare a working paper to compute the capital account balance for each partner immediately after Appleton was admitted to Ray, Randall & Appleton LLP on May 31, 2013.
Explanation / Answer
Total Capital after admission $400,000
(210,000+110,000+80,000)
Appleton shares 400,000@35% 140,000
Cash brought by him (80,000)
Bonus to Appleton $60,000
$60,000 bonus will be provided by Ray and Randall in the ratio of 3:2
Total Capital after admission $400,000
(210,000+110,000+80,000)
Appleton shares 400,000@35% 140,000
Cash brought by him (80,000)
Bonus to Appleton $60,000
$60,000 bonus will be provided by Ray and Randall in the ratio of 3:2
Cash $80,000 Ray's Captial 36,000 Randall's capital 24,000 Appleton's capital $140,000Related Questions
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