Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 3

A partnership has the following account balances: Cash $50,000; Other Assets $600,000; Liabilities $240.000; Nixon, Capital (50% of profits and losses) $200,000; Hoover, Capital (20%) $120,000; and Polk, Capital (30%) $90,000.Each of the following questions should be viewed as an independent situation:
a.Grant invests $80,000 in the partnership for an 18 percent capital interest.Goodwill is to be recognized.What are the capital accounts thereafter
b.Grant invests $100.000 in the partnership to get a 20 percent capital balance.Goodwill is not to be recorded.What are the capital accounts thereafter