Determining the initial capital balance


Response to the following problem:

Brian is admitted to the Harper & Frost Partnership under the goodwill method. Brian contributes cash of $20,000 and non-cash assets with a market value of $30,000 and book value of $15,000 in exchange for a 20% ownership interest in the new partnership. Prior to the admission of Brian, the capital of the existing partnership was $130,000 and an appraisal showed the partnership net assets were fairly stated. What will be Brian's initial capital balance?

A) $36,000

B) $50,000

C) $35,000

D) $45,000

PLEASE SHOW CALCULATIONS ON HOW YOU ARRIVED AT YOUR ANSWER.

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Financial Accounting: Determining the initial capital balance
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