Reference no: EM132756430
Problem 1: Alex and Jason are partners with capital balances of $30,000 and $30,000, respectively. Profits and losses are shared on the basis of capital balances. Alex and Jason admit Kristin to a 25% interest with a $20,000 investment. Select the following statement that is true regarding Kristin's admission to the partnership.
A. There is a bonus to the old partners of $5,000 each.
B. There is a bonus to the old partners of $10,000 each.
C. There is a bonus to the new partner.
D. There is no bonus; Kristin's capital account will increase by the $20,000 she invested.
Problem 2: Ben, Kayla, and Ryan are partners with capital account balances of $20,000, $20,000, and $20,000. They share the profits equally. Ryan is withdrawing from the business, so the partners have the assets appraised. The building's market value is $6,000 more than its book value. Ryan agrees to accept $30,000 in cash for his partnership interest. Based on the above information, all of the following statements are true except __________.
A. Ryan is withdrawing for $10,000 more than the book value of his capital account
B. after settlement with the withdrawing partner, the balance in Ben's capital account will equal $18,000
C. the revaluation of the building will increase Ben's capital account by $2,000
D. Ryan will withdraw from the partnership by receiving cash of $30,000