Kat and Stevens agree to accept Nugent as a partner upon his investment of $50,0

Question

Kat and Stevens agree to accept Nugent as a partner upon his investment of $50,000 cash. Nugent is to receive a 20% ownership interest in the new partnership. Any bonus is attributable to the existing partners and is shared equally. Kat and Stevens combined capital (before Nugents investment) totals $180,000. Nugent's credit to Capital equals $50,000 Nugent's credit to Capital equals $46,000 Total Partnership capital would increase by $46,000 Total Partnership capital would decrease by $50,000 Sun and Moon, LLP's equity section of the balance sheet shows the following information: Capital, Sun 50,000 Capital, Moon 75,000 Net Income 165,000 If the partnership does not have an agreement, how will net income be split between the partners? (answers on next page) Net Income will be retained by the partnership Net income will be split based on the partners capital balances Net income will be split evenly between partners The partners will only receive a salary

Explanation / Answer

Ans 15 B Nugents credit to capital equal to $46000 When Nugent contributes $50000 than the total capital becomes 180000+50000 230000 Nugent % 20% Capital should be 46000 Ans he contributed 50000 Bonus 4000 distributed among Increase Kat 2000 Stevens 2000 Their capital Kat 92000 Stevens 92000 Ans 16 B Net Income will be spilt based on the partner capital balances As when there is no partnership agreement this is the correct way to ditribute IS ON THEIR CONTRIBUTION MADE BY THEM Sun 50000 Moon 75000 so ratio is 2:3 So 165000 will be distributed in the ratio of 2:3 Sun 66000 Moon 99000

Related Questions

Navigate

• Browse (All)
• Browse K
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.