Question

In: Accounting

A. Determine the recipient(s) and amount of the partner bonus. Recipient(s): Check all that apply. Jun...

A. Determine the recipient(s) and amount of the partner bonus.

Recipient(s): Check all that apply.

Jun Ito

Cody Jenkins

Valeria Solano

Amount of the partner bonus: .

B)

PAGE 10

JOURNAL

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT
1
2
3
4

C. Why would a bonus be paid in this situation?

1.Jenkins and Ito apparently value the expertise offered by Solano.

2.Jenkins and Ito apparently want to ensure that all assets are valued appropriately when taking on a new partner.

3.Solano apparently is willing to pay extra for the privilege of joining the partnership.

Cody Jenkins and Jun Ito formed a partnership to provide landscaping 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 landscape designs, 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. Required: A. Determine the recipient(s) and amount of the partner bonus. B. On December 31, provide the journal entry to admit Solano into the partnership. Refer to the Chart of Accounts for exact wording of account titles. C. Why would a bonus be paid in this situation?

Expert Solution

Determine the recipient and amount of the partner bonus.

Bonus received by Solano:

Cody Jenkin, Capital $ 72000
Jun Ito, Capital                    38000
Valeria Solano's Contribution        30000
Total Partners' Capital              $140,000
Solano's equity Interest x 30%
Salone’s, Capital                     $42000
Salone's Contribution        30000
Bonus paid to Lane           $12000

(b) Provide journal entry to admit Lane into the partnership.

Account Title	Debit	Credit
Cash	30000
Cody Jenkin Capital	6000
Jun Capital	6000
Salone Capital		42000

(c) Why would a bonus be paid in this situation?

2.Jenkins and Ito apparently want to ensure that all assets are valued appropriately when taking on a new partner.

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