Scenario 14-1 Callie Is Admitted to the Adams & Beal Partnership Under

question 18

Multiple Choice

Scenario 14-1
Callie is admitted to the Adams & Beal Partnership under the bonus method. Callie contributes cash of $20,000 and non-cash assets with a market value of $30,000 and book value of $15,000 in exchange for a 20% ownership interest in the new partnership. Prior to the admission of Callie, the capital of the existing partnership was $130,000 and an appraisal showed the partnership net assets were fairly stated.
-Refer to Scenario 14-1. Adams & Beal shared profits and losses at a ratio of 80/20, respectively. Which of the following bonus amounts would be recorded?

• A) $14,000 to Callie capital
• B) $2,800 increase to Beal capital
• C) $2,800 decrease to Beal capital
• D) $7,000 increase to Adams capital

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Definitions:

1892

The year notable for events like the Homestead Strike in the United States and the founding of the General Electric Company.

Slogan

A short, memorable phrase used in advertising, political campaigns, or as a motto to capture the essence of beliefs, goals, or intentions.

Farmers Alliance

A broad-based populist socio-economic movement among American farmers that developed and flourished in the 1870s and 1880s.

1870s

A decade marked by significant events such as the Franco-Prussian War, the establishment of the German Empire, and advances in technology and culture during the late 19th century.