P, L, and O are partners with capital balances of $50,000, $30,000 and $20,000 and who share in the profit and loss of the PLO partnership 30%, 20%, and 50%, respectively, when they agree to admit C for a 20% interest.
If C is to contribute an amount equal to his book value share of the new partnership, how much should C contribute?
C contributes $38,000 to the partnership and the bonus method is used. What amount will be credited for C’s beginning capital balance?
If C contributes $40,000 to the partnership and the goodwill method is used, what amount will be debited for goodwill?
C contributes $10,000 to the partnership and the goodwill method is used. What will be the result of the goodwill calculation?
A) Goodwill of $15,000; split among the original partners.
B) Goodwill of $15,000; all to C.
C) Goodwill of $15,000; split among all four partners: P, L, O, and C.
D) Goodwill of $12,000; all to C.
E) Goodwill of $12,000; split among original partners.
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