1 Peters and Chong are partners and share equally in income

1/ Peters and Chong are partners and share equally in income or loss. Peters\' current capital balance is $210,000 and Chong\'s is $200,000. Peters and Chong agree to accept Aaron with a 30% interest in the partnership. Aaron invests $178,000 in the partnership. The amount credited to Aaron\'s capital account is:

Multiple Choice

$116.400

176.400

$178,000.

$188,000.

$388,000.

2/ Cox, North, and Lee form a partnership. Cox contributes $204,000, North contributes $170,000, and Lee contributes $306,000. Their partnership agreement calls for a 6% interest allowance on the partner\'s capital balances with the remaining income or loss to be allocated equally. If the partnership reports income of $154,800 for its first year, what amount of income is credited to Lee\'s capital account?

Multiple Choice

$48,200

.38,000

51.600

50.240

56.360

Solution

1 Total capital after Aaron\'s admission = 210000+200000+178000= 588000 Amount credited to Aaron\'s capital account = 588000*30%= 176400 2 Interest credited: Cox 12240 =204000*6% North 10200 =170000*6% Lee 18360 =306000*6% Remaining net income = 154800-12240-10200-18360= 114000 Amount credited to Lee\'s capital account = 18360+(114000/3)= 56360