When an Existing Partner Sells His Interest to Another Party

question 134

Multiple Choice

When an existing partner sells his interest to another party in a personal transaction:

• A)it is considered a transaction between the partnership and the new party.
• B)the old partnership will continue functioning, since the partner is replaced by another party without diluting the old partnership.
• C)the journal entry simply debits the withdrawing partner's capital account and credits the new partner's capital.
• D)the equity and assets in the balance sheet increase by the same amount.

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