A partnership admits a new partner.The new partner invests $70,000 in the business and receives a credit of $90,000 to his capital account.The difference of $20,000 is called a(n):
A)admission fee.
B)partnership expense.
C)bonus.
D)illegal activity.

Question

Quizplus · Accepted Answer

The $20,000 difference between the new partner's investment of $70,000 and the credit of $90,000 to his capital account is known as a bonus. This is usually offered as an incentive for the new partner to join the partnership and is determined by the existing partners.

A Partnership Admits a New Partner