PE 12-4A Partner bonus

Sharpe has a capital balance of $300,000 after adjusting assets to fair market value. Rojas contributes $250,000 to receive a 60% interest in a new partnership with Sharpe.

Determine the amount and recipient of the partner bonus.

Answer:

Equity of Sharpe.............................................................................. $300,000 Rojas’ contribution..........................................................................  250,000 Total equity after admitting Rojas.................................................. $550,000 Rojas’ equity interest...................................................................... × 60% Rojas’ equity after admission ........................................................ $330,000  
Rojas’ contribution.......................................................................... $250,000 Rojas’ equity after admission ........................................................  330,000 Bonus paid to Sharpe..................................................................... $ 80,000 

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