A partnership has the following capital balances with partners' profit and loss percentages indicated parenthetically:Burks (45% )$100,000Donovan (30%)200,000Watkins (258)300,000Ranzilla agrees to pay a total of $198,000 directly to these three partners to acquire a 25 percent ownership interest fromeach. The partnership will record goodwill based on the new partner's payment. What is Donovan's capital balance afterthe transaction?Multiple Choice$150,000$175,000$200,000$193,200

Capital balances are given below : Burks (45%) $100,000 Donovan (30%) 200,000 Watkins (25%)…

Answered: A partnership has the following capital…

A partnership has the following capital balances with partners' profit and loss percentages indicated parenthetically: Burks (45% ) $100,000 Donovan (30%) Watkins (258) 200,000 300,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Partnership Accounting

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.

Partner Admission and Withdrawal

A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.

Question

100%

A partnership has the following capital balances with partners' profit and loss percentages indicated parenthetically:
Burks (45% )
$100,000
Donovan (30%)
200,000
Watkins (258)
300,000
Ranzilla agrees to pay a total of $198,000 directly to these three partners to acquire a 25 percent ownership interest from
each. The partnership will record goodwill based on the new partner's payment. What is Donovan's capital balance after
the transaction?
Multiple Choice
$150,000
$175,000
$200,000
$193,200

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