Caitlin, Chris, and Molly Are Partners and Share Income and Losses

Caitlin, Chris, and Molly are partners and share income and losses in a 3:4:3 ratio. The partnership's capital balances are Caitlin, $120,000; Chris, $80,000; and Molly, $100,000. Paul is admitted to the partnership on July 1 with a 20% equity and invests $160,000. The balance in Paul's capital account immediately after his admission is:

A) $160,000
B) $460,000
C) $92,000
D) $68,000
E) $300,000

Correct Answer:

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