Jell and Dell were partners with capital balances of $600 and $800, and an income-sharing ratio of 2:3. They admitted Zell with a 30% interest in the partnership, and the total amount of goodwill credited to the original partners was $700. What amount did Zell contribute to the business?

Question

Quizplus · Accepted Answer

Zell's 30% interest implies the partnership is valued at $3,000 (since 30% of $3,000 is $900). The original capital plus goodwill is $2,100 ($600 + $800 + $700). Zell's contribution makes up the difference to reach the $3,000 valuation, which is $900.

Jell and Dell Were Partners with Capital Balances of $600