Cody Jenkins and Jun Ito formed a partnership to provide landscaping services. Jenkins and Ito shared profits and losses equally. After all the tangible assets have been adjusted to current market prices, the capital accounts of Cody Jenkins and Jun Ito have balances of $77,900 and $34,800, respectively. Valeria Solano has expertise with using the computer to prepare landscape designs, cost estimates, and renderings. Jenkins and Ito deem these skills useful; thus, Solano is admitted to thepartnership at a 30% interest for a purchase price of $27,400.
Required:
A. Determine the recipient(s) and amount of the partner bonus.
B. On December 31, provide the journal entry to admit Solano into the partnership. Refer to the Chart of Accounts for exact wording of account titles.
C. Why would a bonus be paid in this situation?