EXERCISE 7-13. Multiple Choice Problems. On the space provided below, write the CAPITAL LETTER of the best answer. 1. Nancy and Perry are partners, and each has a capital balance of #100,000. To gain admission to the partnership, Mitch pays #52,000 directly to Nancy for one-half of her equity. After the admission of Mitch, the total partners' equity in the records of the partnership will be A. #252,000 C. #202,000 B. #200,000 D. #152,000 2. Mina and Eda are partners, and each has a capital balance of #80,000. To gain admission to the partnership, Myra pays #38,000 directly to Eda for one-half of her equity. After the admission, Eda's capital account will reflect an equity interest of A. #38,000 C. #40,000 B. #42,000 D. #39,000 3. Anson and Brian are partners, and each has a capital balance of $150,000. To gain admission to the partnership, Lenny pays $160,000 directly to Anson and Brian for one-half of their equities. After the admission of Lenny, Anson and Brian's capital accounts will reflect an equity interest, respectively, of A. #80,000 and #80,000 B. #78,000 and #77,000 C. #150,000 and #160,000 D. #75,000 and #75,000 4. Cedie and Sarah are partners and together have equity of 150,000 in the partnership. Remy wishes to become a partner with 4 interest in the firm. If her investment reflects the cash paid, how much will she contribute to the partnership? A. #37,500 C. #50,000 B. #200,000 D. #87,500 5. Hansel and Gretel are partners. Hansel's capital balance is 130,000 and Gretel's is #150,000. They agreed to share equally in profits and losses. Both partners agree to accept a third investor, Mocha, as a new partner with a 25% interest in the partnership. Mocha intends to invest $115,000 in cash. The bonus that is granted to Hansel and Gretel is closest to A. #32,500 each C. #8, 125 each B. 10,833 each D. None; bonus to Mocha instead. 6. Gideon and Joshua ae partners with capital account balances of #260,000 and #240,000, respectively, and share profits and losses in the ratio of 6:4. The partners decided to admit Levi as a new partner with a 20% equity interest for an investment of #150,000 in the partnership. Prior to admission, Gideon and Joshua would revalue the partnership's assets. If 6. Gideon and Joshua ae partners with capital account balances of #260,000 and #240,000, respectively, and share profits and losses in the ratio of 6:4. The partners decided to admit Levi as a new partner with a 20% equity interest for an investment of $150,000 in the partnership. Prior to admission, Gideon and Joshua would revalue the partnership's assets. If the net increase in the partnership assets was $185,000, what would be the balance of Gideon's capital account after revaluation but before the admission of Levi? A. #371,000 C. #351,000 B. #334,000 D. #314,000 7. On December 31, 2019, Lilo, Stitch, and Tom are partners with capital account balances of $95,000, #80,000, and #60,000, respectively, and share profits and losses in the ratio 5:3:2. The partners decided to admit Jerry as a new partner by contributing cash of #80,000 to the partnership and by paying $10,000 for 15% of Stitch's share. Jerry would have a 20% share in the profit and loss ratio. After the admission, the partnership has a total capital balance of #330,000 and a #70,000 balance in Jerry, Capital. The capital balance of Stitch immediately after the admission of Jerry is A. #81,100 C. #72,600 B. #79,100 D. #74,600 8. Joel, JC, and LJ are partners with capital balances of #50,000, #80,000, and #120,000, and share profits and losses in the ratio of 2:4:4, respectively. Due to a house relocation, LJ decided to withdraw from the partnership. The partners agreed that machinery and equipment be increased by #85,000 upon dissolution. Upon settlement of ownership interest, LJ received $165,000. The capital balance of Joel immediately after the withdrawal of LJ would be closest to A. #50,000 C. #78,333 B. #67,000 D. #63,333 9. Assuming the same information in Item 8, the capital balance of JC immediately after the withdrawal of LJ would be closest to A. #80,000 C. #109,600 B. #106,667 D. #114,000 10. Joel, JC, and LJ are partners with capital balances of #50,000, #80,000, and #120,000, and share profits and losses in the ratio of 2:4:4, respectively. Due to old age, LJ decided to retire from the partnership. Upon settlement of ownership interest, LJ received #165,000. If the asset revaluation method was used, the capital balance of Joel immediately after the withdrawal of LJ would be closest to A. #50,000 C. #72,500 B. #67,000 D. #87,500