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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Partner bonus

Hiro has a capital balance of $75,000 after adjusting assets to fair market value. Marone contributes $20,000 to receive a 40% interest in a new partnership with Hiro.

Determine the amount and recipient of the partner bonus.

To determine

Partnership

It is that form of organization which is owned and managed by two or more persons who invest and share the profits and losses according to a pre-determined ratio.

To determine:  The amount and recipient of the partner bonus.

Explanation

Partnership firm pays bonus to the newly admitted partner because, the new partner is expected to help in increasing the net income of the firm through its skill and the excess amount invested to join the firm.

The amount and recipient of the partner bonus is as follows:

Equity of H $75,000
M’s contribution $20,000
Total equity after admitting M �...

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