# Arun and Margot want to admit Tammy as a third partner for their partnership. Their capital balances prior to Tammy’s admission are \$50,000 each. Prepare a schedule showing how the bonus should be divided among the three, assuming the profit or loss agreement will be 1:3 once Tammy has been admitted and her contribution is: A. \$20,000 B. \$80,000 C. \$50,000. In addition, show the resulting journal entries to each of the three partners’ capital accounts.

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### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

#### Solutions

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FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 15, Problem 2PA
Textbook Problem
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## Arun and Margot want to admit Tammy as a third partner for their partnership. Their capital balances prior to Tammy’s admission are \$50,000 each. Prepare a schedule showing how the bonus should be divided among the three, assuming the profit or loss agreement will be 1:3 once Tammy has been admitted and her contribution is:A. \$20,000B. \$80,000C. \$50,000.In addition, show the resulting journal entries to each of the three partners’ capital accounts.

To determine

Introduction:

If a new partner is introduced to an old partnership, a new capital account must be opened for new partner to reflect the new member of the partnership.

To prepare:

Journal entries and schedules.

### Explanation of Solution

A bonus should be divided as shown in below schedule among the partners on the admission of a new partner:

Investment of the new partner is not given in the question so applying hit & trial method to show the bonus to the partners considering option C: \$80,000

Schedule

 Particulars Amounts Total capital (2×\$50000) Investment by new partner (T) Total capital of new partnership Tammy’s capital credit(1/3 of \$1,80,000) Total Bonus to A&M \$1,00,000 \$80,000 \$1,80,000 \$60,000 \$30,000

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