Assume That the Capital of an Existing Partnership Is $130,000

question 37

Multiple Choice

Assume that the capital of an existing partnership is $130,000 and that existing assets are overvalued by $10,000. If an incoming partner acquires a 25% interest in the partnership for $37,000, goodwill traceable to the incoming partner is ____.

• A)$2,250
• B)$4,750
• C)$3,000
• D)$5,000

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Definitions:

Schedule Of Cost Of Goods Sold

A schedule that contains three elements of product costs—direct materials, direct labor, and manufacturing overhead—and that summarizes the portions of those costs that remain in ending Finished Goods inventory and that are transferred out of Finished Goods into Cost of Goods Sold.

Work In Process

Inventory items that are in the production process but not yet completed; often abbreviated as WIP.

Manufacturing Overhead Cost

Manufacturing overhead cost includes all indirect factory-related expenses incurred during the production process, such as maintenance, utilities, and quality control.

Cost Of Goods Manufactured

The total cost incurred to manufacture products, including labor, materials, and overhead, that were completed during a specific period.