The following is the current balance sheet for a local partnership of doctors: Cash and current assets Land Building and equipment (net) $ 50,000 290,000 220,000 Liabilities A, capital B, capital C, capital D, capital Totals $ 90,000 70,000 90,000 140,000 170,000 $ 560,000 Totals $ 560,000 The following questions represent independent situations: a. E is going to invest enough money in this partnership to receive a 20 percent interest. No goodwill or bonus is to be recorded. How much should e invest? b. E contributes $120,000 in cash to the business to receive a 20 percent interest in the partnership. Goodwill is to be recorded. Profits and losses have previously been split according to the following percentages: A, 30 percent: B. 10 percent; C, 40 percent, and D. 20 percent. After E makes this investment, what are the individual capital balances? c. E contributes $42.000 in cash to the business to receive a 20 percent interest in the partnership. Goodwill is to be recorded. The four original partners share all profits and losses equally. After E makes this investment, what are the individual capital balances? d. E contributes $88,000 in cash to the business to receive a 22 percent interest in the partnership. No goodwill or other asset revaluation is to be recorded. Profits and losses have previously been split according to the following b. E contributes $120,000 in cash to the business to receive a 20 percent interest in the partnership. Goodwill is to be recorded. Profits and losses have previously been split according to the following percentages: A, 30 percent; B, 10 percer C, 40 percent; and D, 20 percent. After E makes this investment, what are the individual capital balances? c. E contributes $42,000 in cash to the business to receive a 20 percent interest in the partnership. Goodwill is to be recorded. The four original partners share all profits and losses equally. After E makes this investment, what are the indivi capital balances? d. E contributes $88,000 in cash to the business to receive a 22 percent interest in the partnership. No goodwill or other a revaluation is to be recorded. Profits and losses have previously been split according to the following percentages: A, 10 percent; B, 30 percent; C, 20 percent; and D, 40 percent. After E makes this investment, what are the individual capital balances? e. C retires from the partnership and, as per the original partnership agreement, is to receive cash equal to 130 percento her final capital balance. No goodwill or other asset revaluation is to be recognized. All partners share profits and losses equally. After the withdrawal, what are the individual capital balances of the remaining partners? Show less Individuals (b) Capital Balances (c) Capital Balances Capital Balances Capital Balances A B D E
