Floyd and Merriam Start a Partnership Business on June 12

question 65

Multiple Choice

Floyd and Merriam start a partnership business on June 12, 2019. Their capital account balances as of December 31, 2020 stood as follows: Floyd and Merriam share profits and losses equally. They agreed to dissolve the partnership and start a new one, admitting Ramelow for one-half share in the capital in exchange for land and equipment having a total market value of $70,000. Which of the following is the correct journal entry to record the introduction of Ramelow as a partner?

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Definitions:

Closing Entries

Entries recorded at the close of an accounting period to move balances from temporary to permanent accounts.

Adjusted Trial Balance

A list of all accounts and their balances after adjusting entries are made, used to prepare financial statements and ensure the ledger accounts are balanced.

Current Assets

Assets that a company expects to convert to cash or use up within one year or the operating cycle, whichever is longer.

Property, Plant, and Equipment

Long-term or relatively permanent tangible assets such as equipment, machinery, and buildings that are used in normal business operations.