A summary balance sheet for the partnership of Maddy, Nelson and Olsen on December 31, 2014 is shown below. Partners Maddy, Nelson and Olsen allocate profit and loss in their respective ratios of 9:6:10.
The partners agree to admit Poosh for a one-tenth interest. The fair market value for partnership land is $180,000, and the fair market value of the inventory is $150,000.
Required:
1. Record the entry to revalue the partnership assets prior to the admission of Poosh.
2. Calculate how much Poosh will have to invest to acquire a 10% interest.
3. Assume the partnership assets are not revalued. If Poosh paid $200,000 to the partnership in exchange for a 10% interest, what is the bonus that is allocated to each partner's capital account?

Question

A summary balance sheet for the partnership of Maddy, Nelson and Olsen on December 31, 2014 is shown below. Partners Maddy, Nelson and Olsen allocate profit and loss in their respective ratios of 9:6:10.
  The partners agree to admit Poosh for a one-tenth interest. The fair market value for partnership land is $180,000, and the fair market value of the inventory is $150,000.
Required:
1. Record the entry to revalue the partnership assets prior to the admission of Poosh.
2. Calculate how much Poosh will have to invest to acquire a 10% interest.
3. Assume the partnership assets are not revalued. If Poosh paid $200,000 to the partnership in exchange for a 10% interest, what is 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 Maddy, Nelson and Olsen on December 31, 2014 is shown below. Partners Maddy, Nelson and Olsen allocate profit and loss in their respective ratios of 9:6:10.
  The partners agree to admit Poosh for a one-tenth interest. The fair market value for partnership land is $180,000, and the fair market value of the inventory is $150,000.
Required:
1. Record the entry to revalue the partnership assets prior to the admission of Poosh.
2. Calculate how much Poosh will have to invest to acquire a 10% interest.
3. Assume the partnership assets are not revalued. If Poosh paid $200,000 to the partnership in exchange for a 10% interest, what is the bonus that is allocated to each partner's capital account?

A Summary Balance Sheet for the Partnership of Maddy, Nelson