Question

A partnership has the following capital balances: Comprix (40% of gains and losses) $ 180,000 Heflin (30%) 280,000 Kaplan (30%) 380,000 Mahar is going to pay a total of $280,000 directly to these three partners to acquire a 25 percent ownership interest from each. Goodwill is to be recorded. What is Heflin’s capital balance after the transaction

Answer 1

Answer:

$210,000 is the capital balance of Heflin after acquisition by Mahar

Explanation:

In this question we are asked to calculate the capital balance of Heflin given the data in the above question.

Firstly, we identify the capital account of Heflin before the acquisition. From the question, this is equivalent to a value of $280,000

Now, we calculate the proportionate capital transferred. That is same as 25% of the total; 25/100 * 280,000 = $70,000

The ending capital of Heflin after acquisition would be mathematically = Capital account of Heflin before admission - Ending capital of Heflin after admission= $280,000 - $70,000 = $210,000