Problem:
Immediately prior to the admission of Allen, the Sanson-Jeremy Partnership assets had been adjusted to current market prices, and the capital balances of Sanson and Jeremy were $80,000 and $120,000 respectively.
Required:
Question: If the parties agree that the business is worth $240,000, what is the amount of bonus that should be recognized in the accounts at the admission of Allen?
a. $40,000
b. $60,000
c. $100,000
d. $80,000
Note: Provide support for your rationale.