Reference no: EM133051670

Question - MAHAL admits KITA as partner in business. Accounts in the ledger for MAHAL on October 31, 2021, just before the admission of KITA show the following balances:

Cash: $50,000

Accounts Receivable: $110,000

Notes Receivable: $20,000

Inventories: $50,000

Accounts Payable: $30,000

It is agreed that for the purpose of establishing MAHAL's interest, the following adjustments shall be made:

a. An allowance for doubtful accounts of 5% of accounts receivable is to be established.

b. An inventory amounting to $10,000 is worthless

c. Prepaid Expense of $1,000 and accrued expense of $2,000 are to be recognized

d. An interest of 10% on notes receivable amounting $10,000 dated April 30, 2021 is to be accrued.

KITA is to invest sufficient cash to obtain a 1/4 interest in the partnership.

Determine the amount of cash investment by partner KITA.