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How much cash should be contributed by lucas

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Question - Mark and Johnny are both owners of existing single proprietorship business. They agreed to combine their businesses into a partnership including Lucas as capitalist partner. They agreed to start a total capitalization of $400,000. Any deficiency will be absorbed by Lucas and contribute cash to arrive at the total agreed capital.

Balances per individual Statement of Financial Position

Mark Johnny

Cash Assets 20,000 5,000

Noncash assets 85,000 135,000

Liabilities 10,000

Equity 105,000 130,000

They also agreed to the following valuation of their businesses' non-cash assets.

-Noncash assets should be valued at 80%.

Liabilities will not be absorbed by the partnership. How much cash should be contributed by Lucas to arrive at total agreed capital?

a. 201,000

b. 165,000

c. 155,000

d. 199,000

Reference no: EM132834036

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