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Question

The following condensed balance sheet is presented for the partnership of Der, Egan, and Oprins, who share profits and losses in the ratio of 4:3:3, respectively.

Cash$40,000Accounts Payable$150,000Other Assets710,000Der, Capital260,000Egan, Capital180,000Oprins, Capital160,000Total Assets$750,000Total Liabilities & Equity$750,000\begin{array}{lrlr} \text{Cash} & \$\hspace{5pt}40,000 & \text{Accounts Payable} & \$150,000\\ \text{Other Assets} & \text{710,000} & \text{Der, Capital} & \text{260,000}\\ && \text{Egan, Capital} & \text{180,000}\\ && \text{Oprins, Capital} & \text{160,000}\\ \hline \text{Total Assets} & \underline{\underline{\$750,000}} & \text{Total Liabilities \& Equity} & \underline{\underline{\$750,000}}\\ \end{array}

Assume that the partnership decides to admit Snider as a new partner with a 25 percent interest.


Required

Determine the amount that Snider must contribute in cash or other assets for the case below.

  • The partners agree that total resulting capital should be $820,000 and no goodwill should be recognized.

Solution

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In this problem, we are asked to determine how much Snider should invest to acquire a 25% interest in the partnership.

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