_____ Data for the Partnership of Able and Baker Follow

Multiple Choice

_____ Data for the partnership of Able and Baker follow:
Cook is to be admitted into the partnership and is to have a one-fifth interest in capital and profits with a cash contribution of $40,000. The balances in the capital accounts of Able, Baker, and Cook under the recording the goodwill method are:

A) $80,000, $60,000, and $40,000, respectively.
B) $92,000, $68,000, and $40,000, respectively.
C) $95,000, $65,000, and $40,000, respectively.
D) $82,400, $61,600, and $36,000, respectively.
E) None of the above.