A Summary Balance Sheet for the Partnership of Maddy,Nelson and Olsen

question 11

Essay

A summary balance sheet for the partnership of Maddy,Nelson and Olsen on December 31,2014 is shown below.Partners Maddy,Nelson and Olsen allocate profit and loss in their respective ratios of 9:6:10.
The partners agree to admit Poosh for a one-tenth interest.The fair market value for partnership land is $180,000,and the fair market value of the inventory is $150,000.
Required:
1.Record the entry to revalue the partnership assets prior to the admission of Poosh.
2.Calculate how much Poosh will have to invest to acquire a 10% interest.
3.Assume the partnership assets are not revalued.If Poosh paid $200,000 to the partnership in exchange for a 10% interest,what is the bonus that is allocated to each partner's capital account?

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Definitions:

Outstanding

Refers to something that is still due, unresolved, or remaining to be paid or completed.

In Treasury

Refers to stocks or bonds that a company keeps in its own treasury after they have been repurchased or are not yet issued.

Noncumulative

A characteristic of certain preferences or instruments that do not allow for the accumulation of unpaid dividends or benefits if they are not paid in a given period.

Nonparticipating

In the context of insurance or preferred stock, it refers to policies or shares that do not share in the profits beyond a specified amount.