After Closing the Temporary Owners' Equity Accounts into Income Summary

question 40

Multiple Choice

After closing the temporary owners' equity accounts into Income Summary, and after allocating the net income and closing the partners' drawing accounts, assume the partners' capital accounts had credit balances as follows: Peluso, $20,000; Odin, $30,000; Nazaro, $45,000. Partners share profits and losses as follows: Peluso, 20%; Odin, 30%; and Nazaro, 50%. If Peluso purchased Nazaro's interest in the partnership for $40,000 cash, the amount entered in Nazaro's capital account is a

• A) $5,000 debit.
• B) $40,000 debit.
• C) $40,000 credit.
• D) $45,000 debit.

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Definitions:

Quantity Blocks

Predefined quantities of goods or services, often used in pricing or packaging.

Third-degree Price Discrimination

A pricing strategy where different prices are charged to different groups of customers based on their willingness to pay.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to changes in its price, indicating the sensitivity of consumers to price changes.

Increasing Block Rate

A pricing structure where the unit price of a service or commodity increases with the amount consumed, commonly used in utility and service pricing to encourage conservation.