Reference no: EM132950155

On April 30, 2021, Ashley admits Bray for an interest in his business. On this date, Ashley's capital account shows a balance of $158,400. The following were agreed upon before the formation of the partnership:

1. Prepaid expenses of $17,500 and accrued expenses of $5,000 are to be recognized
2. 5% of the outstanding accounts receivable of Ashley amounting to $100,000 is to be recognized as uncollectible

Problem 1: Bray is to be credited with a 1/3 interest in the partnership and is to invest cash. How much cash is to be invested by Bray?

Option 1: $55,300
Option 2: $82,950
Option 3: $32,950
Option 4: $35,000