The partners of Wohl, Xavier, and Yepp LLP shared net income and losses in a 5:3:2 ratio, respectively. The capital account balances on April 30, 2006, were as follows: The carrying amounts of the assets and liabilities of the partnership were the same as their current fair values. Zabb was to be admitted to the partnership with a 20% capital interest and a 20% share of net income and losses in exchange for a cash investment. No goodwill or bonus was to be recognized. The amount of cash that Partner Zabb should invest in the partnership is:

Question

The partners of Wohl, Xavier, and Yepp LLP shared net income and losses in a 5:3:2 ratio, respectively. The capital account balances on April 30, 2006, were as follows:  The carrying amounts of the assets and liabilities of the partnership were the same as their current fair values. Zabb was to be admitted to the partnership with a 20% capital interest and a 20% share of net income and losses in exchange for a cash investment. No goodwill or bonus was to be recognized. The amount of cash that Partner Zabb should invest in the partnership is:

Quizplus · Accepted Answer

Rationale: ($150,000 x 1/4 = $37,500)

The Partners of Wohl, Xavier, and Yepp LLP Shared Net