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Provide the journal entry to admit Lane into the partnership

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Problem - Admitting new partner with bonus - Andrew Hall and Brian Li formed a partnership to provide landscaping services. Hall and Li shared profits and losses equally. After all the tangible assets have been adjusted to current market prices, the capital accounts of Andrew Hall and Brian Li have balances of $54,000 and $71,000, respectively. Kristin Lane has expertise with using the computer to prepare landscape designs, cost estimates, and renderings. Hall and Li deem these skills useful; thus, Lane is admitted to the partnership at a 30% interest for a purchase price of $35,000.

Required -

a. Determine the recipient and amount of the partner bonus.

b. Provide the journal entry to admit Lane into the partnership.

c. Why would a bonus be paid in this situation?

Reference no: EM132878182

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