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The partnership of Tasha and Bill shares profits and losses in a 50:50 ratio, and the partners have capital balances of $45,000 each. Prepare a schedule showing how the bonus should be divided if Ashanti joins the partnership with a $60,000 investment. The partner’s new agreement will share profit and loss in a 1:3 ratio.

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Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

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FindFindarrow_forward

Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 15, Problem 3EA
Textbook Problem
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The partnership of Tasha and Bill shares profits and losses in a 50:50 ratio, and the partners have capital balances of $45,000 each. Prepare a schedule showing how the bonus should be divided if Ashanti joins the partnership with a $60,000 investment. The partner’s new agreement will share profit and loss in a 1:3 ratio.

To determine

Introduction:

Partnership refers to a form of business ownership where two or more than two persons join to run a business. They share capital, liability and profit & losses of business.

To prepare:

A schedule showing the division of bonus among old partners.

Explanation of Solution

Calculation of bonus amount will be as follows:

Particulars Amount ($)
Total capital of old partners 90,000
Partner’s old ratio 50:50
Investment by new partner 60,000
Total capital of new partnership 150,000
New partner’s capital credit 50,000
Total bonus to old partner 10,000

Calculation of new partner’s capital credit:

Ratio of old partners is 50:50.

Investment by new partner is $60,000.

Newpartner'scapitalcredit=(13×$150,000)=$50,000

Calculation of bonus to old partners:

Totalbonustooldpartners=(Investmentbynewpartnernewpartner's

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Chapter 15 Solutions

Principles of Accounting Volume 1
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