Question

Cody Franklin and Pete Harris formed a partnership to provide landscaping services. Franklin and Harris shared profits and losses equally. After all the tangible assets have been adjusted to current market prices, the capital accounts of Franklin and Harris have balances of $72,000 and $38,000, respectively. Angela Marino has expertise with using the computer to prepare landscape designs, cost estimates, and renderings. Franklin and Harris deem these skills useful; thus, Marino is admitted to the partnership at a 30% interest for a purchase price of $30,000. "format all amounts with a dollar sign and a comma (ex. $x.xxx) What amount will be in Marino's capital account What amount is the bonus Does Marino receive a bonus (yes or no) Does Franklin receive a bonus (yes or no) Does Harris receive a bonus (yes or no)

Answer 1

Marino Capital Account Bonus amount Does Marino receive a bonus Does Franklin receive a bonus Does Haris receive a bonus $42,000 (See note (ii)] $12,000 (See note (iii)] Yes No No Note () Existing Partnership Capital Franklin Haris Existing Partnership Capital Add: Investment By Marino Paid in Capital after admission of Marino $72,000 $38,000 $110,000 $30,000 $140,000 Partnership Capital after Marino's Admission Marino's Share Marino's Capital ($140000 x 30%] $140,000 30% $42,000 Marino Capital allocation Less: Marino Investment Bonus $42,000 ($30,000) $12,000