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 25% interest. Block will invest $35,000 in the partnership. The bonus that is granted to Block equals:

Question

Quizplus · Accepted Answer

The total capital after Block's investment is $160,000 ($64,000 + $61,000 + $35,000). Block's 25% interest should be $40,000 (25% of $160,000). Since Block invests $35,000, the bonus granted to Block is $5,000 ($40,000 - $35,000).

Groh and Jackson Are Partners