James Wants to Invest Cash So That He Will Have

question 27

Multiple Choice

James wants to invest cash so that he will have a one-third interest in Thomas and Stanley's company.The capital balances are $6,000 Thomas,$9,000 Stanley.The admission of James would be to:

• A)debit Cash $3,000;credit James,Capital $3,000.
• B)debit Cash $4,500;credit James,Capital $4,500.
• C)debit Cash $7,500;credit James,Capital $7,500.
• D)debit Cash $12,000;credit James,Capital $12,000

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Definitions:

Statement of Members' Equity

A financial document that shows the changes in the equity of a company's members or owners over a specific period.

Equity Reporting

The process of disclosing the ownership interest in a company, typically through financial statements, to provide transparency about value to shareholders.

Capital Balance

The amount of equity a partner has in a partnership or an owner has in a business, reflecting the net value of their investment.

Deficiency

The debit balance in the owner’s equity account of a partner.