Answered: A, B AND C are sole proprietors looking…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter13: Choice Of Business Entity—general Tax And Nontax Factors/formation

Section: Chapter Questions

Problem 43P

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A, B AND C are sole proprietors looking to form a new partnership. A is to be contributed cash of 150,000 and his delivery vehicle originally bought at 160,000 but has a second hand value 100,000. B is to contribute cash amounting to 200,000 and furniture worth 40,000 but was only aquired for 36,000. Partner C, whose family business is to sell computers contributed cash of 80,000 and computers and printers with a regular price of 160,000 but with a cost of 140,000. ABC partnership stipulates their P and L ratio to be 3:2:3. what is the capital balances of A, B AND C?

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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