In the AD partnership,Allen's capital is $140,000 and Daniel's is $40,000 and they share income in a 3:1 ratio,respectively.They decide to admit David to the partnership.Each of the following questions is independent of the others.
-Refer to the information provided above.David directly purchases a one-fifth interest by paying Allen $34,000 and Daniel $10,000.The land account is increased before David is admitted.What are the capital balances of Allen and Daniel after David is admitted into the partnership?

Question

Quizplus · Accepted Answer

After David is admitted into the partnership, the total capital will increase by $44,000 (34,000 + 10,000). Since David purchases a one-fifth interest, his share of the total capital will be $44,000 divided by 5, which equals $8,800. Therefore, the new capital balances will be:
Allen = $140,000 + 3/4($8,800) = $146,600
Daniel = $40,000 + 1/4($8,800) = $42,200

In the AD Partnership,Allen's Capital Is $140,000 and Daniel's Is