Keith and Jim are partners. Keith has a capital balance of $50,000 and Jim has a capital balance of $40,000. Bill invested $30,000 to acquire an ownership interest of 30%. Which of the following statements is true of this transaction?

Question

Quizplus · Accepted Answer

Bill received a bonus of $6,000 because his investment of $30,000 for a 30% interest implies a total partnership value of $100,000. However, the existing capital was $90,000 ($50,000 + $40,000), so Bill's investment effectively increased the partnership value, resulting in a bonus to him.

Keith and Jim Are Partners