The following balance sheet information is for the partnership of Abele,Boule,and Cayman: Figures shown parenthetically reflect agreed profit and loss sharing percentages.
If the assets are fairly valued on the above balance sheet and the partnership wishes to admit Dann as a new 1/5 partner without recording goodwill or bonus,Dann should invest cash or other assets of

Question

The following balance sheet information is for the partnership of Abele,Boule,and Cayman:  Figures shown parenthetically reflect agreed profit and loss sharing percentages.
If the assets are fairly valued on the above balance sheet and the partnership wishes to admit Dann as a new 1/5 partner without recording goodwill or bonus,Dann should invest cash or other assets of

Quizplus · Accepted Answer

To admit Dann as a new 1/5 partner, the new equity percentage of the partnership will be 1/5 or 20%. We need to find out how much new capital Dann needs to inject to maintain the existing values of the partnership's assets and equity. 
Total partnership equity is $2,256,000, of which Boule owns $902,400 (40%), Cayman owns $676,800 (30%), and Abele owns $676,800 (30%). 
Thus 20% of the total equity is (0.20 x $2,256,000) = $451,200. 
The total value of partnership assets is $3,456,000, so Dann's $451,200 investment represents 13.05% of total assets. 
Therefore, Dann should invest at least $300,000 in cash or other assets to maintain the existing values of the partnership's assets and equity, without recording goodwill or bonus. 
Hence, the best choice is C.

The Following Balance Sheet Information Is for the Partnership of Abele,Boule,and