Question - A, B and C have capital of $120,000, $70,000, and $60,000 respectively. The partners share profit and loss in the agreed ratio of 40/30/30. D joins the partnership with $80,000 in exchange for 20% interest in capital and 20% interest in profit and loss. The existing assets of the original partnership are undervalued (this means you need to increase assets) by $40,000. The original partners share balance of profit and loss in proportion to the original percent.
Instructions: Calculate the capital balances for each individual in the new partnership assuming bonus and good will method.