The capital account balances for Donald & Hanes LLP on January 1, 2011, were as
ID: 2494876 • Letter: T
Question
The capital account balances for Donald & Hanes LLP on January 1, 2011, were as follows:
Donald, capital : $200000
Henes, capital: $100000
Donald and Hanes shared net income and losses in the ratio of 3:2, respectively. The partners agreed to admit May to the partnership with a 35% interest in partnership capital and net income. May invested $100,000 cash, and no goodwill was recognized.
What is the balance of Donald's capital account after the new partnershipis created?
a)84000
b) 100,000
c) 140,000
d) 176,000
Explanation / Answer
May's Capital = 100000
Mays Share = 35%
Donald 's would recieve amount for reducing the sharing = 100000*3/5
Donald 'swould recieve amount for reducing the sharing = 60000
Henes 's would provide the sharing = 100000*2/5
Henes's would provide the sharing = 40000
Balance of Donald's capital account = Old Capital Balance - Donald 's would recieve amount for reducing the sharing
Balance of Donald's capital account = 200000-60000
Balance of Donald's capital account = 140000
Answer
c) 140,000
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