A Partner Contributes, as Part of Her Initial Investment, Accounts

question 84

Multiple Choice

A partner contributes, as part of her initial investment, accounts receivable with an allowance for doubtful accounts. Which of the following reflects a proper treatment?

• A) The allowance for doubtful accounts should be recorded at its fair value.
• B) The allowance account may be set up on the books of the partnership because it relates to the existing accounts that are being contributed.
• C) The allowance account should not be carried onto the books of the partnership.
• D) The accounts receivable and allowance should not be recorded on the books of the partnership because a partner must invest cash in the business.

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