A summary balance sheet for the partnership of Quail, Rainne and Selma on December 31, 2014 is shown below. Partners Quail, Rainne and Selma allocate profit and loss in their respective ratios of 6:3:1.
The partners agree to admit Trask for a one-tenth interest. The fair market value for partnership land is $260,000, and the fair market value of the inventory is $370,000.
Required:
1. Record the entry to revalue the partnership assets prior to the admission of Trask.
2. Calculate how much Trask will have to invest to acquire a 10% interest.
3. Assume the partnership assets are not revalued. If Trask paid $300,000 to the partnership in exchange for a 10% interest, what would be the bonus that is allocated to each partner's capital account?

Question

A summary balance sheet for the partnership of Quail, Rainne and Selma on December 31, 2014 is shown below. Partners Quail, Rainne and Selma allocate profit and loss in their respective ratios of 6:3:1.
  The partners agree to admit Trask for a one-tenth interest. The fair market value for partnership land is $260,000, and the fair market value of the inventory is $370,000.
Required:
1. Record the entry to revalue the partnership assets prior to the admission of Trask.
2. Calculate how much Trask will have to invest to acquire a 10% interest.
3. Assume the partnership assets are not revalued. If Trask paid $300,000 to the partnership in exchange for a 10% interest, what would be the bonus that is allocated to each partner's capital account?

Quizplus · Accepted Answer

The Answer of A summary balance sheet for the partnership of Quail, Rainne and Selma on December 31, 2014 is shown below. Partners Quail, Rainne and Selma allocate profit and loss in their respective ratios of 6:3:1.
  The partners agree to admit Trask for a one-tenth interest. The fair market value for partnership land is $260,000, and the fair market value of the inventory is $370,000.
Required:
1. Record the entry to revalue the partnership assets prior to the admission of Trask.
2. Calculate how much Trask will have to invest to acquire a 10% interest.
3. Assume the partnership assets are not revalued. If Trask paid $300,000 to the partnership in exchange for a 10% interest, what would be the bonus that is allocated to each partner's capital account?

A Summary Balance Sheet for the Partnership of Quail, Rainne