A summary balance sheet for the Lemon, Mango, and Nobb partnership appears below. Lemon, Mango, and Nobb share profits and losses in a ratio of 2:3:5, respectively. Assets Cash $ 100,000 Marketable securities 200,000 Inventory 125,000 Land 100,000 Building-net 500,000 Total assets $1,025,000 Equities Lemon, capital $ 425,000 Mango, capital 400,000 Nobb, capital 200,000 Total equities $1,025,000 The partners agree to admit Oran for a one-fifth interest. The fair market value of partnership land is appraised at $200,000 and the fair market value of inventory is $175,000. The assets are to be revalued prior to the admission of Oran and there is $30,000 of goodwill that attaches to the old partnership. How much cash must Oran invest to acquire a one-fifth interest? A. $235,000 B. $235,000 C. $293,750 D. $301,250
A summary balance sheet for the Lemon, Mango, and Nobb
Assets
Cash $ 100,000
Marketable securities 200,000
Inventory 125,000
Land 100,000
Building-net 500,000
Total assets $1,025,000
Equities
Lemon, capital $ 425,000
Mango, capital 400,000
Nobb, capital 200,000
Total equities $1,025,000
The partners agree to admit Oran for a one-fifth interest. The fair market value of partnership land is appraised at $200,000 and the fair market value of inventory is $175,000. The assets are to be revalued prior to the admission of Oran and there is $30,000 of
How much cash must Oran invest to acquire a one-fifth interest?
| A. |
$235,000 |
|
| B. |
$235,000 |
|
| C. |
$293,750 |
|
| D. |
$301,250 |
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