Question

Morgan and Dana are partners. The partnership capital for Morgan is $50,000 and for Dana is $60,000. Townsend is admitted as a new partner by investing $40,000 cash. Townsend is given a 25% interest in return for her investment. The amount of the bonus to the old partners is

Answer 1

$2,500

Step-by-step explanation:

Given the following:

Old partners :

Morgan's partnership capital = $50,000

Dana's partnership capital = $60,000

New partner :

Townsend's partnership capital = $40,000

Total partnership capital :

Old partner + new partner

$(50,000+60,000+40,000) = $150,000

Townsend's investment return :

25% of total partnership investment

0.25 × $150,000 = $37,500

Bonus to old old partners:

Townsend's investment capital - Townsend's return

$(40,000 - 37,500) = $2,500

Bonus to old partners = $2,500