Keith and Jim are partners.Keith has a capital balance of $50,000 and Jim has a capital balance of $38,000.Bill invested a building worth $30,000 to the partnership for an ownership interest of 20%.How much is the total bonus for the existing partners?
A)$30,000
B)$6400
C)$15,000
D)$8000

Question

Quizplus · Accepted Answer

The total capital of the partnership before Bill's investment is $88,000 ($50,000 + $38,000). After Bill's investment, the total capital is now $118,000 ($88,000 + $30,000). Bill's 20% ownership interest represents $23,600 ($118,000 x 20%). The bonus for the existing partners is the excess of Bill's investment over his ownership interest, which is $6,400 ($30,000 - $23,600). Therefore, the answer is B.

Keith and Jim Are Partners