Keith and Jim Are Partners

question 147

Multiple Choice

Keith and Jim are partners. Keith has a capital balance of $50,000 and Jim has a capital balance of $35,000. Jim sells $15,000 of his ownership to Bill. Which of the following is true of the journal entry to admit Bill?

• A)Bill, Capital will be debited for $20,000.
• B)Jim, Capital will be debited for $20,000.
• C)Jim, Capital will be credited for $15,000.
• D)Bill, Capital will be credited for $15,000.

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Definitions:

Net Present Value

A method used in capital budgeting to assess the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Discount Factor(s)

A numerical factor used to calculate the present value of future cash flows, reflecting how future values are worth less in today's terms.

Salvage Received

The amount of money or value received from selling or disposing of obsolete or excess inventory, equipment, or other assets.

Internal Rate Of Return

A metric used in capital budgeting to estimate the profitability of potential investments.