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

After admitting Ramelow into the business, the new capital balance should be calculated as follows:

Floyd: $90,000
Merriam: $75,000
Ramelow: ($24,000 cash contribution + 1/3 interest) = $48,000

Total capital after admitting Ramelow: $213,000

Therefore, the correct capital account balance of Ramelow after he enters the business is $29,333 (1/3 of $213,000). Thus, the answer is D.

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 $\begin{array} { | l | l | } \hline \text { Floyd } & \$ 47,000 \\\hline \text { Merriam } & 17,000 \\\hline\end{array}$