Question

Partner Bonus

Lilly has a capital balance of $93,000 after adjusting assets to fair market value. Lowman contributes $54,000 to receive a 30% interest in a new partnership with Lilly.

Determine the amount and recipient of the partner bonus.

Amount of bonus	$
Recipient of bonus

Liquidating Partnerships

Prior to liquidating their partnership, Todd and Montgomery had capital accounts of $76,000 and $110,000, respectively. Prior to liquidation, the partnership had no cash assets other than what was realized from the sale of assets. These partnership assets were sold for $166,000. The partnership had $9,000 of liabilities. Todd and Montgomery share income and losses equally.

Determine the amount received by Todd as a final distribution from liquidation of the partnership.
$

Answer 1

Partner Bonus

Equity of Lilly = $93,000

Lowman Contribution = $54,000

Total equity after admitting Lowman = $93,000 + $54,000 = $147,000

Lowman equity interest = 30%
Lowman equity after admission = $147,000 * 30% = $44,100

Bonus paid to Lily = Lowman Contribution - Lowman equity after admission = $54,000 - $44,100 = $9,900

Amount of Bonus = $9,900

Recipient of Bonus = Lily

Liquidating Partnerships

Partnership gain after liquidation = Assets sold - (Total capital + Liabilities) = $166,000 - ($76,000 + $110,000 + $9,000) = - $29,000 (loss)

Todd's share of loss = 50% of ($29,000) = ($14,500)

Amount received by Todd as a final distribution from liquidation of the partnership = $76,000 - $14,500 = $61,500