Groh and Jackson are partners. Groh's capital balance in the partnership is $64,000, and Jackson's capital balance $61,000. Groh and Jackson have agreed to share equally in income or loss. Groh and Jackson agree to accept Block with a 20% interest. Block will invest $35,000 in the partnership. The bonus that is granted to Groh and Jackson equals:

Question

Quizplus · Accepted Answer

The bonus to Groh and Jackson is equal to the difference between their capital balances and the amount they would have received if Block had been admitted without a bonus. Groh's capital balance is $64,000, and he would have received $42,000 (20% of $210,000) if Block had been admitted without a bonus. Therefore, Groh's bonus is $64,000 - $42,000 = $22,000. Jackson's capital balance is $61,000, and he would have received $42,000 if Block had been admitted without a bonus. Therefore, Jackson's bonus is $61,000 - $42,000 = $19,000. The total bonus to Groh and Jackson is $22,000 + $19,000 = $41,000. Each partner receives half of the bonus, or $20,500.

Groh and Jackson Are Partners