Chase and Hatch are partners and share equally in income or loss. Chase's current capital balance is $135,000 and Hatch's is $120,000. Chase and Hatch agree to accept Flax with a 30% interest in the partnership. Flax invests $115,000 in the partnership. The amount credited to Flax's capital account is:
A) $111,000.
B) $115,000.
C) $92,500.
D) $120,000.
E) $119,000.

Question

Quizplus · Accepted Answer

The total capital after Flax's investment is $370,000 ($135,000 + $120,000 + $115,000). Flax's 30% interest means his capital should be 30% of $370,000, which is $111,000.

Chase and Hatch Are Partners and Share Equally in Income