RD formed a partnership on February 10,2009.R contributed cash of $150,000,while D contributed inventory with a fair value of $120,000.Due to R's expertise in selling,D agreed that R should have 60 percent of the total capital of the partnership.R and D agreed to recognize goodwill.What is the total capital of the RD partnership and the capital balance of R after the goodwill is recognized?

Question

Quizplus · Accepted Answer

The total capital of the partnership is calculated by recognizing goodwill. R's capital should be 60% of the total capital. R contributed $150,000, and D contributed $120,000, totaling $270,000. To make R's capital 60% of the total, we calculate the total capital as $150,000 / 0.6 = $250,000. The goodwill is $250,000 - $270,000 = $30,000. Therefore, the total capital is $250,000 + $30,000 = $300,000, and R's capital balance is $180,000 (60% of $300,000).

RD Formed a Partnership on February 10,2009