Cody Jenkins and Lacey Tanner formed a partnership to provide landscaping services. Jenkins and Tanner shared profits and losses equally. After all the tangible assets have been adjusted to current market prices, the capital accounts of Cody Jenkins and Lacey Tanner have balances of $78,000 and $46,000, respectively. Valeria Solano has expertise with using the computer to prepare landscape designs, cost estimates, and renderings. Jenkins and Tanner deem these skills useful; thus, Solano is admitted to the partnership a 30% interest for a purchase price of $31,000. Required:
a. Determine the recipient and amount of the partner bonus.
b. Provide the journal entry to admit Solano into the partnership.
c. Why would a bonus be paid in this situation?

See explanation

Explanation:

a. The bonus received by Solano will be:

Cody Jenkins, capital =$78,000

Lacey Tanner, capital = $46000

Solano’s contribution = $31,000

Total contribution:

= $78000 + $46000 + $31000

= $155000

Solano’s equity interest = 30%

Valeria Solano, capital:

= 30% × $155,000

= $46500

Since Solano’s contribution = $31,000, the bonus paid to Solano will be:

= $46500 - $31000

= $15500

b. Debit Cash $31,000

Debit Cody Jenkins, capital $7750

Debit Lacey Tanner, capital $7750

Credit Valeria Solano, capital $46500

c. The expertise that was offered by Salina was valued by Jenkins and Tanner. Solano can do landscape designs with the computer.

The skills she possesses will be of immense benefits to the partnership as it'll be useful to achieve the partnerships aims. This may bring about the payment of bonus for her skills.

answer; a large down payment,a longer term loan, would result in a lower monthly payment;