Adams, Brown, and Carson are considering the admission of Daniels to their partnership. The current partners share profits in the ratio of 4:2:1 respectively, and they have capital balances totaling $86,000. Daniels is to obtain a 20% interest in net assets upon making his investment in the firm.
1. If no goodwill or bonus is to be recognized in recording his admission, it is implied that Daniels should invest A. $14,333. B. $17,200. c. $20,640. D. $21,500.
2. Assuming Daniels invests $25,000 for a 20% interest in net assets after recording his investment, the implied bonus to the old partners is A. $2,800. B. $5,000. c. $12,000. D. $17,200.
3. Assuming Daniels' investment indicates a bonus to the old partners of $8,000, the journal entry to be made should include a A. debit to Brown, Capital for $2,286. B. debit to Brown, Bonus for $2,286. C. credit to Brown, Capital for $2,286. D. credit to Brown, Bonus for $2,286.
4. If Daniels' Capital account is credited for $26,000 upon his investment of $26,000 for a 20% interest in net assets, there is A. a bonus to the old partners of $8,800. B. a bonus to Daniels of $8,800. C. implied goodwill of $18,000 to the old partners. D. implied goodwill of $18,000 to Daniels.