Darrow invests $250,000 in cash for a 30 percent ownership interest. The money goes to the business.
Question:
Darrow invests $250,000 in cash for a 30 percent ownership interest. The money goes to the business. No goodwill or other revaluation is to be recorded. After the transaction, what is Jennings’s capital balance?
a. $160,000.
b. $168,000.
c. $170,200.
d. $171,200.
Capital account balances:
William (40% of gains and losses) . . . . . . . . . . . . . $220,000
Jennings (40%) . . . . . . . . . . . . . . . . . . . . . . . . . . ... 160,000
Bryan (20%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,000
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of...
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d Because the money goes into the business total capital becomes 740000 ...View the full answer
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