Question

1/ Mace and Bowen are partners and share equally in income or loss. Mace's current capital balance is $171,000 and Bowen's is $150,000. Mace and Bowen agree to accept Kent with a 30% interest in the partnership. Kent invests $151,000 in the partnership. The balances in Mace's and Bowen's capital accounts after admission of the new partner equal:

Multiple Choice

Mace $180,400; Bowen $150,000.

Mace $166,300; Bowen $145,300.

Mace $171,000; Bowen $150,000.

Mace $175,700; Bowen $154,700.

Mace $171,000; Bowen $159,400.

2/ Wallace and Simpson formed a partnership with Wallace contributing $74,000 and Simpson contributing $54,000. Their partnership agreement calls for the income (loss) division to be based on the ratio of capital investments. Wallace sold one-half of his partnership interest to Prince for $70,000 when his capital balance was $91,000. The partnership would record the admission of Prince into the partnership as:

Multiple Choice

Debit Wallace, Capital $70,000; credit Prince, Capital $70,000.

Debit Wallace, Capital $45,500; credit Prince, Capital $45,500.

Debit Prince, Capital $70,000; credit Wallace, Capital $70,000.

Debit Wallace, Capital $37,000; credit Prince, Capital $37,000.

Debit Wallace, Capital $45,500; debit Cash $24,500; credit Prince, Capital $70,000.

3/ Peters and Chong are partners and share equally in income or loss. Peters' current capital balance is $270,000 and Chong's is $260,000. Peters and Chong agree to accept Aaron with a 30% interest in the partnership. Aaron invests $238,000 in the partnership. The amount credited to Aaron's capital account is:

Multiple Choice

$508,000.

$248,000.

$238,000.

$230,400.

$152,400

Answer 1

ans 1
Correct option Mace $175,700; Bowen $154,700.
Total capital
Mace capital	171000
Brown capital	150000
Kent capital	151000
Total capital	472000
Kent capital account to be credited (472000*30%)	141600
Amt invested by Kent	151000
difference will be shared equally by Mace and brown	9400
Amt credited to Mace is 9400*1/2	4700
Amt credited to Brown is 9400*1/2	4700
Mace capital 171000+4700	175700
Kent capital 150000+4700	154700
ans 2
Debit Wallace, Capital $45,500; credit Prince, Capital $45,500
As wallace sold half of his interest so half of $91000 is $45500
So wallace will be debited by $455500 and Prince will be credited
by $45500. As it’s a personal transaction between Prince & wallace
hence it does not matter how much cash Prince gave to Wallace for
the partnership firm.
ans 3
Total capital
Peter capital	270000
Chong capital	260000
Aaron Capital	238000
Total capital	768000
Amt to be credited to Aaron capital (768000*30%)	230400
Option D $230400

If any doubt please comment