Question
Admitting New Partner With Bonus Cody Jenkins and Lacey Tanner formed a partnership to provide landscaping...
Admitting New Partner With Bonus Cody Jenkins and Lacey Tanner formed a partnership to provide landscaping services. Jenkins and Tanner shared profits and losses equally. After all the tangible assets have been adjusted to current market prices, the capital accounts of Cody Jenkins and Lacey Tanner have balances of $50,000 and $65,000, respectively. Valeria Solano has expertise with using the computer to prepare landscape designs, cost estimates, and renderings. Jenkins and Tanner deem these skills useful; thus, Solano is admitted to the partnership at a 30% interest for a purchase price of $31,000.
a. Determine the recipient and amount of the partner bonus.
b. Provide the journal entry to admit Solano into the partnership. For a compound transaction, if an amount box does not require an entry, leave it blank.
c. Why would a bonus be paid in this situation?
Apparently, Jenkins and Tanner value _________ offered by Solano.
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TIL
Answers
solution . a Total Capital Total cap Alter Solano Admission = 5000D + 65000 - 115000 As per Bonus Method, Solano capital = 115000 x 30% = 34500 Balance - 34500 - 31000 = 3500 95 a divided between the old partners in the old sharing ratio. cody Lacey Jenkins capital Tanner capital Account = 3500 x 150% = 1750 Account = 3500 x 50% = 1750 Recepient - valoria Solano - 3500 (Bonus) Particulars Debit Credit 31000 150 cash Cody Jenking, Capital Lacey Tanner, capital valerila Solano, capital Record the Solano, admitted as partner] 1750 34500 I Since, solano has coming with the expertise knowledge of computer, It will give benefits to partnership in future.
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