Hewlett and Martin are partners. Hewlett's capital balance in the partnership is $64,000, and Martin's capital balance $67,000. Hewlett and Martin have agreed to share equally in income or loss. The existing partners agree to accept Black with a 20% interest. Black will invest $35,000 in the partnership. The bonus that is granted to Hewlett and Martin equals:

Question

Quizplus · Accepted Answer

To calculate the bonus, we need to first find the total capital balance after Black's investment:
Total capital balance = $64,000 + $67,000 + $35,000 = $166,000

Now, we need to calculate the new profit and divide it equally between the three partners:
New profit = Total capital balance * 20% = $166,000 * 0.2 = $33,200
Each partner's share in new profit = $33,200 / 3 = $11,066.67

Finally, we need to calculate the bonus by subtracting the current share in profit from the new share in profit:
Bonus for Hewlett = $11,066.67 - ($64,000 / 3) = $900
Bonus for Martin = $11,066.67 - ($67,000 / 3) = $900

Therefore, the answer is C.

Hewlett and Martin Are Partners