Edwin and Darren Have Decided to Form a Partnership

question 3

Multiple Choice

Edwin and Darren have decided to form a partnership. Edwin contributes $80,000 cash and merchandise inventory with a current market value of $20,000. Darren contributes $2,100 cash and office furniture with a current market value of $2,800. While journalizing this transaction:

• A)Office Furniture will be debited for $1,120.
• B)Office Furniture will be credited for $2,800.
• C)Office Furniture will be debited for $2,800.
• D)Office Furniture will be credited for $1,120.

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Definitions:

Financial Authority

An entity or individual with the power to manage financial matters, including investments, budget allocation, and financial planning.

Chief Financial Officer

A senior executive responsible for managing the financial actions of a company, including financial planning and risk management.

Double Taxation

A taxation principle referring to income taxes paid twice on the same source of earned income, it can occur when income is taxed at both the corporate level and personal level.

Corporation

A legal entity that is distinct and separate from its owners, capable of owning property, incurring debt, and being sued or suing.