Elkins and Landry are partners who share income and losses in the ratio of 3:2 respectively. On August 31 their capital balances were: Elkins $140000 and Landry $120000. On that date they agree to admit Neumark as a partner with a one-third capital interest. If Neumark invests $100000 in the partnership what is Elkins's capital balance after Neumark's admittance?

Question

Quizplus · Accepted Answer

Before Neumark's admittance, the total capital was $140000+$120000=$260000. Therefore, Elkins had a 140000/260000 = 0.5385 or 53.85% share of the partnership.

After Neumark's admittance, the new total capital becomes $260000+$100000=$360000. Neumark's capital interest is one-third of this total or $120000. So Elkins's share now becomes 140000/360000 = 0.3889 or 38.89%.

Elkins's new capital balance can be calculated as:

New total capital x Elkins's share = $360000 x 0.3889 = $140004.

Therefore, Elkins's capital balance after Neumark's admittance is $128000.

Elkins and Landry Are Partners Who Share Income and Losses