Holcomb has a capital balance of $87,000 after adjusting assets to fair market value

Accounting Sep 14, 2020

Holcomb has a capital balance of $87,000 after adjusting assets to fair market value. Lowman contributes $46,000 to receive a 35% interest in a new partnership with Holcomb.
Determine the amount and recipient of the partner bonus.
Amount of bonus
Recipient of bonus

Expert Solution

Amount of Bonus= $550

Recipients of bonus= Lowman

EXPLANATION

Holcomb capital balance = $ 87000

Lowman contribution= $46000

Total Capital = 87000+ 46000

= $133000

Interest received by Lowman = $ 133000 x 35%

= $46550

Bonus = Contribution - Interest

= $ 46000 - $ 46550

= -$ 550

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