Floyd and Merriam Start a Partnership Business on June 12 $$\begin{array} { | l | r | } \hline \text { Floyd } & \$ 50,000 \\\hline \text { Merriam } & 20,000 \\\hline\end{array}$$

question 100

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: $$\begin{array} { | l | r | } \hline \text { Floyd } & \$ 50,000 \\\hline \text { Merriam } & 20,000 \\\hline\end{array}$$ They agreed to admit Ramelow into the business for a one-fifth interest in the new partnership. He had to bring in a cash contribution of $30,000 for the same. Assuming that Floyd and Merriam shared profits and losses in the ratio 3:1 before the admission of Ramelow. Which of the following is the correct journal entry to record the above admission?

• A) \[\begin{array} { | c | r | r | }
• \hline \text { Cash } & 30,000 & \\
• \hline \text { Ramelow, Capital } & & 30,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | r | r | }
• \hline { \text { Cash } } & 30,000 & \\
• \hline \text { Merriam, Capital } & & 7,500 \\
• \hline \text { Floyd, Capital } & & 22,500 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Merriam, Capital } & 22,500 & \\
• \hline \text { Floyd, Capital } & 7,500 & \\
• \hline \text { Ramelow, Capital } & & 30,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & 30,000 & \\
• \hline \text { Floyd, Capital } & & 7,500 \\
• \hline \text { Merriam, Capital } & & 2,500 \\
• \hline \text { Ramelow, Capital } & & 20,000 \\
• \hline
• \end{array}\]

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Definitions:

Monthly Compounded

A method where interest adds to the principal sum at the end of each month, allowing for the interest in the next month to be based on the new total.

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