Question
5 , May cheng and hannah webster are partners who share in the income equally and have capital balances of $ 207,000 and $ 62,500 respectively .cheng , with the consent of webster, sells one-thrid of here interest to michael cross. What entry is required by the partnership if the sells price is (a) $ 60,000 ?
(b) $ 80,000 ?
6 cody jenkins and jun Ito formed a partnership ti provide lund scaping 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 land scape designes , 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.?
Solve this question and answer of the more explain ?
(b) $ 80,000 ?
6 cody jenkins and jun Ito formed a partnership ti provide lund scaping 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 land scape designes , 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.?
Solve this question and answer of the more explain ?
Answers
GPT 3.5
1. For the first question:
(a) If the selling price is $60,000, the entry required by the partnership would be:
Cash: $60,000
Cheng's Capital: $20,000 (1/3 of $60,000)
Cross's Capital: $20,000 (1/3 of $60,000)
Webster's Capital: $20,000 (1/3 of $60,000)
(b) If the selling price is $80,000, the entry required by the partnership would be:
Cash: $80,000
Cheng's Capital: $26,667 (1/3 of $80,000)
Cross's Capital: $26,667 (1/3 of $80,000)
Webster's Capital: $26,667 (1/3 of $80,000)
2. For the second question:
A. To determine the recipient and amount of the partner bonus, calculate the total capital balance before admitting Solano. Jenkins and Ito have a total capital balance of $110,000 ($72,000 + $38,000). Solano is admitted with a 30% interest, so her capital contribution would be $30,000. Thus, the new total capital balance becomes $140,000 ($110,000 + $30,000). Jenkins and Ito share equally, so each partner should have $70,000 ($140,000 / 2). However, Jenkins' capital balance is already $72,000, so he has a higher capital balance by $2,000. Therefore, Jenkins would receive the partner bonus of $2,000.
B. The journal entry to admit Solano into the partnership would be:
Cash: $30,000
Valeria Solano's Capital: $30,000
C. A bonus is paid in this situation to compensate Jenkins for his higher capital balance compared to Ito. It equals the difference between their capital balances ($72,000 - $70,000), which is $2,000. This bonus ensures that the partnership remains fair and equal, as Jenkins would have received less capital if it was divided equally without considering his higher initial investment.
(a) If the selling price is $60,000, the entry required by the partnership would be:
Cash: $60,000
Cheng's Capital: $20,000 (1/3 of $60,000)
Cross's Capital: $20,000 (1/3 of $60,000)
Webster's Capital: $20,000 (1/3 of $60,000)
(b) If the selling price is $80,000, the entry required by the partnership would be:
Cash: $80,000
Cheng's Capital: $26,667 (1/3 of $80,000)
Cross's Capital: $26,667 (1/3 of $80,000)
Webster's Capital: $26,667 (1/3 of $80,000)
2. For the second question:
A. To determine the recipient and amount of the partner bonus, calculate the total capital balance before admitting Solano. Jenkins and Ito have a total capital balance of $110,000 ($72,000 + $38,000). Solano is admitted with a 30% interest, so her capital contribution would be $30,000. Thus, the new total capital balance becomes $140,000 ($110,000 + $30,000). Jenkins and Ito share equally, so each partner should have $70,000 ($140,000 / 2). However, Jenkins' capital balance is already $72,000, so he has a higher capital balance by $2,000. Therefore, Jenkins would receive the partner bonus of $2,000.
B. The journal entry to admit Solano into the partnership would be:
Cash: $30,000
Valeria Solano's Capital: $30,000
C. A bonus is paid in this situation to compensate Jenkins for his higher capital balance compared to Ito. It equals the difference between their capital balances ($72,000 - $70,000), which is $2,000. This bonus ensures that the partnership remains fair and equal, as Jenkins would have received less capital if it was divided equally without considering his higher initial investment.