Existing partnersPartner LPartner MCapital balances$50,000$60,000% interest in Capital % interest inProfitThe total value of the new partnership would be:A. $209,000B. $50,000C. $75,000D. $250,00030%70%40%60%Assume partner N invests $40,000 in the business in exchange for 20% interest in capital and20% interest in profit and loss.The asset appreciation attributable to the new partnership would be:

The value of the partnership after the admission of any new partner or by the retirement of the…

Answered: The total value of the new partnership…

Business

Accounting

The total value of the new partnership would be:

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter12: Accounting For Partnerships And Limited Liability Companies

Section: Chapter Questions

Problem 14E

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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

Existing partners
Partner L
Partner M
Capital balances
$50,000
$60,000
% interest in Capital % interest in
Profit
The total value of the new partnership would be:
A. $209,000
B. $50,000
C. $75,000
D. $250,000
30%
70%
40%
60%
Assume partner N invests $40,000 in the business in exchange for 20% interest in capital and
20% interest in profit and loss.
The asset appreciation attributable to the new partnership would be:

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