Benson and Orton are partners who share income in the ratio of 2:3 and have capital balances of $60,000 and $40,000, respectively. Ramsey is admitted to the partnership and is given a 40% interest by investing $20,000. What is Benson's capital balance after admitting Ramsey?

Question

Quizplus · Accepted Answer

First, we need to find out the total capital balance in the partnership before admitting Ramsey:

Benson's capital balance = $60,000
Orton's capital balance = $40,000
Total capital balance = $60,000 + $40,000 = $100,000

Next, we need to calculate Ramsey's capital balance after investing $20,000 and being given a 40% interest:

Ramsey's capital balance = $20,000 / 0.4 = $50,000

Now, we can find the new total capital balance after admitting Ramsey:

New total capital balance = $100,000 + $50,000 = $150,000

We also know that Benson and Orton share income in the ratio of 2:3, which means their total capital contributions are in the ratio of 2:3 as well. Using this ratio, we can find Benson's and Orton's new capital balances:

Benson's new capital balance = (2/5) x $150,000 = $60,000
Orton's new capital balance = (3/5) x $150,000 = $90,000

Therefore, Benson's capital balance after admitting Ramsey is $60,000, which is the same as his original capital balance. The correct answer is C.

Benson and Orton Are Partners Who Share Income in the Ratio