Eberle and Lankton are partners who share income and losses in the ratio of 3:2, respectively. On August 31, their capital balances were: Eberle, $175,000 and Lankton, $150,000. On that date, they agree to admit Newman as a partner with a one-third capital interest. If Newman invests $200,000 in the partnership, what is Lankton's capital balance after Newman's admittance?

Question

Quizplus · Accepted Answer

Newman's investment increases the total capital to $525,000 ($175,000 + $150,000 + $200,000). Newman's one-third interest means he should have $175,000, implying a bonus to existing partners. The bonus is $25,000 ($200,000 - $175,000), shared 3:2, giving Lankton an additional $10,000, making his balance $160,000.

Eberle and Lankton Are Partners Who Share Income and Losses