Question

Mace and Bowen are partners and share equally in income or loss. Mace's current capital balance is $144,000 and Bowen's is $127,500. Mace and Bowen agree to accept Kent with a 30% interest in the partnership. Kent invests $124,000 in the partnership. The balances in Mace's and Bowen's capital accounts after admission of the new partner equal:

Answer 1

There will be no effect to the balances in Mace's and Bowen's capital accounts after admission of the new partner because it will only changes the share in the profit and loss distribution.

Balances in Mace's and Bowen's capital accounts after admission of the new partner will be $144,000 and $127,500 respectively

Step-by-step explanation:

Mace's current capital balance =$144,000

Bowen's current capital balance = $127,500

Share ratio

Mace : Bowen = 50:50

Kent's addition with 30% interest in business with $124,000 investment

Share available for Mace and Bowen = 100%-30% = 70%

The will divide equally the remaining share which will be

Mace : Bowen = 35:35

New Share ratio of the business will be

Mace : Bowen : Kent = 35 : 35 : 30