May and Jun are partners with profit and loss ratio of50:50 and capital balances of $5,400,000 and$6,300,000, respectively. On June 09, 2022, Julie wasadmitted into the partnership by investing $8,100,000 fora 30% of the total partnership capitalization.How much is May's new capital after the admission ofJulie?

When two or more people come together to share all profit and losses is known as a partnership. A…

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Business

Accounting

How much is May's new capital after the admission of Julie?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

May and Jun are partners with profit and loss ratio of
50:50 and capital balances of $5,400,000 and
$6,300,000, respectively. On June 09, 2022, Julie was
admitted into the partnership by investing $8,100,000 for
a 30% of the total partnership capitalization.
How much is May's new capital after the admission of
Julie?

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