Hewlett and Martin are partners. Hewlett's capital balance in the partnership is $64,000, and Martin's capital balance $61,000. Hewlett and Martin have agreed to share equally in income or loss. Hewlett and Martin agree to accept Black with a 25% interest. Black will invest $35,000 in the partnership. The bonus that is granted to Black equals:

$5,000

Explanation:

Calculation for what The bonus that is granted to Block equals:

First step is to calculate the Total Partnership Equity using this formula

Total Partnership Equity = Groh's Capital + Jackson's Capital + Block's Investment

Let plug in the formula

Total Partnership Equity = $64,000 + $61,000 + $35,000

Total Partnership Equity= $160,000

Second step is to calculate the Equity for Block

Equity for Block = $160,000 * 0.25 =

Equity for Block =$40,000

Now let calculate what Bonus to Block equals using this email formula

Bonus to Block = Block's Capital - Cash Investment

Let plug in the formula

Bonus to Block = $40,000 - $35,000

Bonus to Block= $5,000

Therefore the bonus that is granted to Block equals: $5,000

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