Accounting Midterm Exam ACG-2011: Question 11

Chase and Hatch are partners and share equally in income or loss. Chase's current capital balance is $135,000 and Hatch's is $120,000. Chase and Hatch agree to accept Flax with a 30% interest in the partnership. Flax invests $115,000 in the partnership. The balances in Chase's and Hatch's capital accounts after admission of the new partner equal:

	Chase $135,000; Hatch $120,000.
	Chase $137,000; Hatch $122,000
	Chase $133,000; Hatch $118,000.
	Chase $135,000; Hatch $124,000.
	Chase $139,000; Hatch $120,000.

$135,000 + $120,000 + $115,000 = $370,000 x .30 = $111,000
$115,000 - $111,000 = $4,000/2 = $2,000 bonus to each partner
$135,000 + $2,000 = $137,000
$120,000 + $2,000 = $122,000