Question: 16. Lear is to become a partner in the WS partnership by paying $80,000 in cash to the business. At present, the capital balance for

16. Lear is to become a partner in the WS partnership by paying $80,000 in cash to the business. At present, the capital balance for Hamlet is $70,000 and for MacBeth is $40,000. Hamlet and MacBeth share profits on a 7:3 basis. Lear is acquiring 40 percent of the new partnership.

a. If the goodwill method is applied, what will the three capital balances be following the payment by Lear?

b. If the bonus method is applied, what will the three capital balances be following the payment by Lear?

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a Goodwill Method Implied value of partnership 80000 40 200000 Total capital after investment 70000 ... View full answer

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