Donovan invests $60,000 for a 30 percent interest in a partnership in which the other partners have capital totaling $100,000 before admitting Donovan. After distribution of the bonus, what is Donovan's capital balance?
A) $30,000
B) $48,000
C) $60,000
D) $72,000

Question

Quizplus · Accepted Answer

Before Donovan's admission, the total capital of the partnership was $100,000. After Donovan invests $60,000 for a 30% interest, the total capital of the partnership would = $100,000 + $60,000 = $160,000.

Donovan's share of the partnership = 30% of $160,000 = $48,000.

After distribution of the bonus, Donovan's capital balance would be $48,000 (since there is no information given about any change in the partnership's capital balance due to the distribution of bonus). Therefore, the correct answer is B.

Donovan Invests $60,000 for a 30 Percent Interest in a Partnership