8. Eenee, Meanie, and Miney each have a capital balance of $84,000 in their three-person
partnership and vote to allow Martin Moe to contribute $96,000 in cash to the partnership for a
one-fourth interest. Which of the following is an effect of this transaction? A. A gain of $12,000.
B. A loss of $12,000. C. Miney’s capital balance increases by $4,000. D. Miney’s capital balance
increases by $3,000.
Solution
Since Martin Moe joined partnership with 1/4th interest, hence the interest of old partners in the
business remains unaffected. But since martin brought $12,000 more funds which will be treated
as Goodwill to the firm and will get distributed in partners\' capital in their profit-sharing ratio.
Therefore Miney\'s capital balance increases by $3000..
8. Eenee, Meanie, and Miney each have a capital balance of $84,000 i.pdf
1. 8. Eenee, Meanie, and Miney each have a capital balance of $84,000 in their three-person
partnership and vote to allow Martin Moe to contribute $96,000 in cash to the partnership for a
one-fourth interest. Which of the following is an effect of this transaction? A. A gain of $12,000.
B. A loss of $12,000. C. Miney’s capital balance increases by $4,000. D. Miney’s capital balance
increases by $3,000.
Solution
Since Martin Moe joined partnership with 1/4th interest, hence the interest of old partners in the
business remains unaffected. But since martin brought $12,000 more funds which will be treated
as Goodwill to the firm and will get distributed in partners' capital in their profit-sharing ratio.
Therefore Miney's capital balance increases by $3000.
