Bell and Herr sell 1/4 of their partnership interest to Ives receiving $200,000 each. At the time of admission, Bell and Herr each had a $350,000 capital balance. The admission of Ives will cause the net partnership assets to

Question

Quizplus · Accepted Answer

If Bell and Herr each received $200,000 for selling 1/4 of their partnership interest, that means the total amount paid for the 1/2 interest is $400,000 ($200,000 x 2).

However, this does not affect the net partnership assets. The $400,000 paid to Bell and Herr is simply a transfer of assets from the partnership to the individual partners. The total capital balance of the partnership is still $700,000 ($350,000 + $350,000). Therefore, the net partnership assets remain at $700,000.

Bell and Herr Sell 1/4 of Their Partnership Interest to Ives