Peters and Chong are partners and share equally in income or loss. Peters' current capital balance is $140,000 and Chong's is $130,000. Peters and Chong agree to accept Aaron with a 30% interest in the partnership. Aaron invests $98,000 in the partnership. The amount credited to Aaron's capital account is:
A) $114,533.
B) $81,000.
C) $110,400.
D) $98,000.
E) $102,600.

Question

Quizplus · Accepted Answer

To find the amount credited to Aaron's capital account, we need to calculate his ownership percentage and then multiply that by the total capital balance after his investment.

Before Aaron's investment, the total capital balance is $140,000 + $130,000 = $270,000.

After Aaron's investment, the total capital balance becomes $270,000 + $98,000 = $368,000.

Aaron's ownership percentage is 30%, which means his credited amount is:

$368,000 x 0.3 = $110,400

Therefore, the correct answer is C) $110,400.

Peters and Chong Are Partners and Share Equally in Income