Immediately prior to the admission of Allen, the Sanson-Jeremy Partnership assets had been adjusted to current market prices and the capital balances of Sanson and Jeremy were $80,000 and $120,000, respectively. If the parties agree that the business is worth $240,000, what is the amount of bonus that should be recognized in the accounts at the admission of Allen?

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The total capital before Allen's admission is $200,000 ($80,000 + $120,000). The business is valued at $240,000, indicating a $40,000 increase in value, which is the bonus to be recognized.

Immediately Prior to the Admission of Allen, the Sanson-Jeremy Partnership