Faget and Hein Sell to Melges a 1/3 Interest in the Faget

question 1

Multiple Choice

Faget and Hein sell to Melges a 1/3 interest in the Faget - Hein partnership. Melges will pay Faget and Hein each $140000 for admission into the organization. Before this transaction Faget and Hein show capital balances of $210000 each. The journal entry to record the admission of Melges will

• A) show a debit to Cash for $280000.
• B) not show a debit to Cash.
• C) show a debit to Hein Capital for $140000.
• D) show a credit to Melges Capital for $280000.

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Definitions:

Budgeted Overhead

An estimated cost for indirect expenses related to operations that a company or project is expected to incur over a specific period.

Variable Overhead

Costs that vary with production volume, including such expenses as indirect materials, supplies, and utilities for the production process.

Efficiency Variance

A measure in cost accounting used to assess the difference between the actual input used in production and the standard input expected to be used, for cost control purposes.

Direct Labour Hour

A measure of labor directly involved in manufacturing or production, calculated by the amount of time workers spend on specific tasks.