Floyd and Merriam start a partnership business on 12 June 2019.Their capital account balances as of 31 December 2020 stood as follows: $$\begin{array} { | l | l | }
\hline \text { Floyd } & \$ 47,000 \
\hline \text { Merriam } & 17,000 \
\hline
\end{array}$$ They agreed to admit Ramelow into the business for a one-third interest in the new partnership.He had to bring in a cash contribution of $24,000 for the same.Which of the following is the correct capital account balance of Ramelow after he enters the business?

Question

Floyd and Merriam start a partnership business on 12 June 2019.Their capital account balances as of 31 December 2020 stood as follows: $$\begin{array} { | l | l | } 
\hline \text { Floyd } & \$ 47,000 \
\hline \text { Merriam } & 17,000 \
\hline
\end{array}$$ They agreed to admit Ramelow into the business for a one-third interest in the new partnership.He had to bring in a cash contribution of $24,000 for the same.Which of the following is the correct capital account balance of Ramelow after he enters the business?

Quizplus · Accepted Answer

Ramelow's one-third interest means the total capital of the new partnership should be three times his contribution. The total capital after his entry is $47,000 + $17,000 + $24,000 = $88,000. One-third of $88,000 is $29,333, which should be Ramelow's capital account balance.

Floyd and Merriam Start a Partnership Business on 12 June Floyd $47,000 Merriam 17,000\begin{array} { | l | l | } \hline \text { Floyd } & \$ 47,000 \\\hline \text { Merriam } & 17,000 \\\hline\end{array} Floyd Merriam ​$47,00017,000​​

Floyd and Merriam Start a Partnership Business on 12 June $\begin{array} { | l | l | } \hline \text { Floyd } & \$ 47,000 \\\hline \text { Merriam } & 17,000 \\\hline\end{array}$