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Mark and Landry are partners who share income and losses in the ratio of 3:2, respectively. On August 31, their capital balances were: Mark, $144000 and Landry, $112000. On that date, they agree to admit Neumark as a partner with a one-third capital interest. If Neumark invests $107000 in the partnership, what is Mark’s capital balance after Neumark’s admittance?

a.127667
b.135600
c.121000
d.144000

1 Answer

5 votes

Final answer:

In this case, Mark's capital balance after Neumark's admittance is $107,667.

None of the given options is correct

Step-by-step explanation:

To find Mark's capital balance after Neumark's admittance, we need to calculate the new capital balances for each partner.

Initially, Mark's capital balance is $144,000 and Landry's capital balance is $112,000. The ratio of their income and losses is 3:2.

Neumark is admitted as a partner with a one-third capital interest and invests $107,000 in the partnership.

To calculate the new capital balances, we can use the following steps:

1. Determine the total capital after Neumark's investment:

Total capital = Mark's capital + Landry's capital + Neumark's investment

= $144,000 + $112,000 + $107,000

= $363,000

2. Calculate the share of each partner based on the ratio of their income and losses:

Mark's share = (Mark's capital / Total capital) * (1/2) * Total capital

= ($144,000 / $363,000) * (1/2) * $363,000

= $72,000

Landry's share = (Landry's capital / Total capital) * (1/2) * Total capital

= ($112,000 / $363,000) * (1/2) * $363,000

= $56,000

3. Calculate Neumark's share:

Neumark's share = Neumark's investment * (1/3)

= $107,000 * (1/3)

= $35,667

4. Calculate Mark's new capital balance:

Mark's new capital balance = Mark's share + Neumark's share

= $72,000 + $35,667

= $107,667

Therefore, Mark's capital balance after Neumark's admittance is $107,667.

None of the given options is correct

User Mike Gleason
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