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Bishop has a capital balance of $120 000 in a local partnership and Cotton has a $90 000 balance These two


Bishop has a capital balance of $120,000 in a local partnership, and Cotton has a $90,000 balance. These two

partners share profits and losses by a ratio of 60 percent to Bishop and 40 percent to Cotton. Lovett invests $60,000 in cash in the partnership for a 20 percent ownership. The goodwill method will be used. What is Cotton’s capital balance after this new investment?

Multiple Choice

  • $99,600
  • $102,000
  • $112,000
  • $126,000