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 Jenkins and Tanner have balances of $66,000 and $86,000, respective 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 $41,000. a. Determine the recipient and amount of the partner bonus. b. Journalize the entry for the admission of Solano into the partnership. If an amount box does not require an entry, leave it blank. Cash Cody Jenkins, Capital - Lacey Tanner, Capital Valeria Solano, Capital c. Why would a bonus be paid in this situation? Apparently, Jenkins and Tanner value offered by Solano.
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 Jenkins and Tanner have balances of $66,000 and $86,000, respective 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 $41,000. a. Determine the recipient and amount of the partner bonus. b. Journalize the entry for the admission of Solano into the partnership. If an amount box does not require an entry, leave it blank. Cash Cody Jenkins, Capital - Lacey Tanner, Capital Valeria Solano, Capital c. Why would a bonus be paid in this situation? Apparently, Jenkins and Tanner value offered by Solano.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Partnership Accounting
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings, admission of a new partner, etc.
Partner Admission and Withdrawal
A partnership is a kind of arrangement between two or more people whereby they agree to manage the business operations and share its profits and losses in an agreed ratio between them. The agreement that is drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, drawings of a partner, etc.
Question
Transcribed Image Text: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 Jenkins and Tanner have balances of $66,000 and $86,000, 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 $41,000.
a. Determine the recipient and amount of the partner bonus.
b. Journalize the entry for the admission of Solano into the partnership. If an amount box does not require an entry, leave it blank.
Cash
Cody Jenkins, Capital
Lacey Tanner, Capital
Valeria Solano, Capital
c. Why would a bonus be paid in this situation?
Apparently, Jenkins and Tanner value
offered by Solano.
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