Question

Donald and Hanes shared net income and losses in the ratio of 3:2, respectively. The partners agreed to admit May to the partnership with a 35% interest in partnership capital and net income. May invested $100,000 cash, and no goodwill was recognized. What is the new total balance of the partnership accounts?

Answer 1

Answer: Donald - $176,000, May $100,000 and Hanes $84,000.

For a total of $360,000

Step-by-step explanation:

The question was incomplete so I took the liberty of attaching the original question.

From the question, we see that the total amount becomes,

= 200,000 + 100,000 + 100,000

= $400,000

However, May was supposed to invest enough to give him 35% which would have been,

= 35% * 400,000

= $140,000

This means that May put in $40,000 less (140,000 - 100,000)

This $40,000 must therefore be withdrawn by the 2 other partners to balance it off.

They shall be withdrawn in the original proportion.

Donald

= 3/5 * 40,000

= $24,000

Hanes

= 2/5 * 40,000

= $16,000

Reducing their balanced we have,

Donald.

= 200,000 - 24,000

= $176,000

Hanes

= 100,000 - 16,000

= $84,000

Therefore the new total balance of the partnership accounts are Donald - $176,000, May $100,000 and Hanes $84,000.

For a total of $360,000