Farrell and Jimmy Enter into a Partnership Agreement on May

question 70

Multiple Choice

Farrell and Jimmy enter into a partnership agreement on May 1, 2015. Farrell contributes $50,000 and Jimmy contributes $150,000 as their capital contributions. They decide to share profits and losses in the ratio of their respective capital account balances. The net income for the year ended December 31, 2015 is $60,000. Which of the following is the correct journal entry to record the allocation of profit?

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Definitions:

Insanity Standard

A legal concept used to determine the extent to which a person's mental illness impacts their ability to understand the nature and wrongfulness of their actions for criminal responsibility.

Not Guilty

A legal verdict stating that there is not enough evidence to prove beyond a reasonable doubt that the accused committed the offense.

Irresistible Impulse Test

A legal defense principle suggesting a person should not be held responsible for their actions if they could not control their impulses due to a mental illness.

Fit of Passion

An intense and sudden display of emotion, such as anger or excitement, that can result in unpredictable behavior.