Question 47

A summary balance sheet for the Lemon, Mango, and Nobb partnership appears below. Lemon, Mango, and Nobb share profits and losses in a ratio of 2:3:5, respectively.

Assets

Cash $ 100,000

Marketable securities 200,000

Inventory 125,000

Land 100,000

Building-net 500,000

Total assets $1,025,000

Equities

Lemon, capital $ 425,000

Mango, capital 400,000

Nobb, capital 200,000

Total equities $1,025,000

The partners agree to admit Oran for a one-fifth interest. The fair market value of partnership land is appraised at $200,000 and the fair market value of inventory is $175,000. The assets are to be revalued prior to the admission of Oran and there is $30,000 of goodwill that attaches to the old partnership.

What will the profit and loss sharing ratios be after Oran's investment?

	A.	2:3:5:2
	B.	1:2:4:2
	C.	4:6:10:5
	D.	3:4:6:2