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Problem 1: When Mr. B is admitted to the partnership, the fair values of the assets he contributed exceed his initial capital balance. In this case who gets the bonus under the bonus method?
A. Mr. B gets the bonus
B. The old partners get the bonus
C. Both Mr. B and the old partners get the bonus
D. Neither Mr. B nor the old partners get the bonus
Problem 2: When a partner retires and receives settlement in cash less than his capital balance, how should the difference be treated?
A. The difference should be credited to all the partners in their profit and loss ratio
B. The difference should be debited to all the partners in their profit and loss ratio
C. The difference should be credited to the remaining partners in their remaining profit and loss ratio
D. The difference should be debited to the remaining partners in their remaining profit and loss ratio
Financial Statement Analysis and Preparation
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