Benson and Orton are partners who share income in the ratio of 2:3 and have capi

Question

Benson and Orton are partners who share income in the ratio of 2:3 and have capital balances of $60,000 and $40,000 respectively. Ramsey is admitted to the partnership and is given a 40% interest by investing $20,000. What is Benson's capital balance after admitting Ramsey? a. $71,200
b. $20,000
c. $24,000
d. $48,800
Benson and Orton are partners who share income in the ratio of 2:3 and have capital balances of $60,000 and $40,000 respectively. Ramsey is admitted to the partnership and is given a 40% interest by investing $20,000. What is Benson's capital balance after admitting Ramsey? a. $71,200
b. $20,000
c. $24,000
d. $48,800
Benson and Orton are partners who share income in the ratio of 2:3 and have capital balances of $60,000 and $40,000 respectively. Ramsey is admitted to the partnership and is given a 40% interest by investing $20,000. What is Benson's capital balance after admitting Ramsey? a. $71,200
b. $20,000
c. $24,000
d. $48,800

Explanation / Answer

total investment = 120000

equity of ramsey = 0.4 * 120000 = 48000

old partners contribution towards bonus = 48000 - 20000 = 28000

they have ratio of 2:3

bensons capital = 60000 - 28000 * 2/5 = 48800

hence D is the answer

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