On May 1, 2013, James Dear and Joan Clay formed The Leisure Room. The two partne
ID: 2419025 • Letter: O
Question
On May 1, 2013, James Dear and Joan Clay formed The Leisure Room. The two partners invested cash and other assets and liabilities with the following agreed upon values. James: Cash, $12,000; Merchandise inventory, $24,000; Equipment, $76,000; Accounts payable, $10,000. Joan: Furniture, $24,000; Cash, $36,000. James is to own two-thirds of the capital, and Joan is to own one-third of the capital, but they will split profits and losses equally.
How do you find James Dear Capital And Joan Clay Capital?
Explanation / Answer
Given data,
Total Capital Invested:
James: $12000 + $24000 + $76000 - $10000 = $102000
Joan: $24000 + $36000 = $60000
Total Capital Invested = $102000 + $60000 = $162000
James Dear Capital
= Total Capital Invested * 2/3
= $162000 * 2/3
= $108000
Joan Clay Capital
= Total Capital Invested * 1/3
= $162000 * 1/3
= $54000
Capital:
James Dear = $108000
Joan Clay = $54000
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