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Accounting 26th Edition by Carl Warren,James Reeve,Jonathan Duchac
Edition 26ISBN: 978-1285743615Accounting 26th Edition by Carl Warren,James Reeve,Jonathan Duchac
Edition 26ISBN: 978-1285743615 Exercise 15
Admitting new partner with bonus
Cody Jenkins and Jun Ito formed a partnership to provide landscaping services. Jenkins and Ito shared profits and losses equally. After all the tangible assets have been adjusted to current market prices, the capital accounts of Cody Jenkins and Jun Ito have balances of $72,000 and $38,000, respectively. Valeria Solano has expertise with using the computer to prepare landscape designs, cost estimates, and renderings. Jenkins and Ito deem these skills useful; thus, Solano is admitted to the partnership at a 30% interest for a purchase price of $30,000.
a. Determine the recipient and amount of the partner bonus.
b. Provide the journal entry to admit Solano into the partnership.
c. Why would a bonus be paid in this situation
Cody Jenkins and Jun Ito formed a partnership to provide landscaping services. Jenkins and Ito shared profits and losses equally. After all the tangible assets have been adjusted to current market prices, the capital accounts of Cody Jenkins and Jun Ito have balances of $72,000 and $38,000, respectively. Valeria Solano has expertise with using the computer to prepare landscape designs, cost estimates, and renderings. Jenkins and Ito deem these skills useful; thus, Solano is admitted to the partnership at a 30% interest for a purchase price of $30,000.
a. Determine the recipient and amount of the partner bonus.
b. Provide the journal entry to admit Solano into the partnership.
c. Why would a bonus be paid in this situation
Explanation
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Verified
a. Partner Bonus -:
The recipient of b...
Accounting 26th Edition by Carl Warren,James Reeve,Jonathan Duchac
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