Dana Peters was admitted to partnership with a 20% ownership interest after investing $ 30,000 cash. The partnership capital before the admission of Peters was $ 130,000. Which of the following best describes the impact on the capital accounts from this transaction?
A) Peters will pay a bonus of $ 4,000 to the old partners.
B) Peters will pay a bonus of $ 2,000 to the old partners.
C) Peters will receive a bonus of $ 2,000 from the old partners.
D) Peters will receive a bonus of $ 4,000 from the old partners.

Question

Quizplus · Accepted Answer

Peters' capital contribution is $30,000, and her ownership interest is 20%. The total partnership capital before her admission was $130,000. After her admission, the total partnership capital becomes $130,000 + $30,000 = $160,000. Peters' capital account will be credited with $30,000, and the old partners' capital accounts will be credited with the remaining $130,000. Since Peters' capital contribution is less than her ownership interest, she will receive a bonus of $2,000 from the old partners.

Dana Peters Was Admitted to Partnership with a 20% Ownership