In the JK partnership,Jacob's capital is $140,000,and Katy's is $40,000.They share income in a 3:2 ratio,respectively.They decide to admit Erin to the partnership.Each of the following questions is independent of the others.
-Refer to the information provided above.Jacob and Katy agree that some of the inventory is obsolete.The inventory account is decreased before Erin is admitted.Erin invests $38,000 for a one-fifth interest.What is the amount of inventory written down?

Question

Quizplus · Accepted Answer

The total capital before Erin's admission is $180,000 ($140,000 + $40,000). Erin's investment of $38,000 for a one-fifth interest implies the total partnership capital should be $190,000 ($38,000 * 5). Therefore, the inventory must be written down by $28,000 ($180,000 - $190,000 + $38,000).

In the JK Partnership,Jacob's Capital Is $140,000,and Katy's Is $40,000