Caitlin, Chris, and Molly are partners and share income and losses in a 3:4:3 ratio. The partnership's capital balances are Caitlin, $120,000; Chris, $80,000; and Molly, $100,000. Paul is admitted to the partnership on July 1 with a 20% equity and invests $60,000. The balance in Paul's capital account immediately after his admission is:

Question

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Paul's capital account should reflect 20% of the total partnership capital after his investment. The total capital before Paul's admission is $300,000 ($120,000 + $80,000 + $100,000). With Paul's $60,000 investment, the new total capital is $360,000. 20% of $360,000 is $72,000, which is the balance in Paul's capital account.

Caitlin, Chris, and Molly Are Partners and Share Income and Losses