Question

Rez and Gan, partners, have capital balances of P750,000 and P1,500,000 and share profits and losses in a 2:1 ratio, respectively. They admitted Aro into the partnership, with his investment of P750,000 for a 35% interest in the partnership. The new total capital balance after admitting Aro is P3,000,000. The capital of Gan after Aro's admission is:

a. P1,600,000
b. P1,500,000
c. P1,400,000
d. P1,350,000
e. None of the above

Answer 1

The capital of Gan after Aro's admission is P1,500,000.

Step-by-step explanation:

To find the capital of Gan after Aro's admission, we can first calculate the total capital of the partnership before Aro's admission. Rez and Gan's capital balances are P750,000 and P1,500,000. This gives a total capital of P2,250,000 (P750,000 + P1,500,000).

After admitting Aro, the new total capital is given as P3,000,000. Since Aro's investment is P750,000 for a 35% interest in the partnership, we can calculate the remaining capital as:

Remaining Capital = New Total Capital - Aro's Investment

Remaining Capital = P3,000,000 - P750,000

Remaining Capital = P2,250,000

Since the remaining capital is the same as the total capital before Aro's admission, we can conclude that the capital of Gan after Aro's admission is P1,500,000.