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Assume that Partners A and B each report a Capital Account of $650,000. Partner C wants to join the partnership as an equal one-third
Assume that Partners A and B each report a Capital Account of $650,000. Partner C wants to join the partnership as an equal one-third partner. Because the partnership has been very profitable, Partners A and B require Partner C to contribute $1,400,000 in cash to the partnership in return for a one-third interest. Assume that Partners A and B share profits 60% and 40%, respectively, prior to the admission of Partner C. After admission of Partner C, Partners A and B retain their relative proportion of profit allocation after granting Partner C a 30% profit-allocation interest. The partners decide to use the Bonus method. The entry to record the transaction will include a credit to Partner A of a credit to Partner B of, and a credit to Partner C of
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