Table 12-5 Jim and Joe Are Partners Agreeing to Share Profits and Profits

question 164

Multiple Choice

Table 12-5
Jim and Joe are partners agreeing to share profits and losses in a 2:6 ratio, respectively. Business has been profitable and they have decided to admit Jewel to the partnership for a cash investment. The balances in Jim and Joe's capital accounts are presently $240,000 and $260,000, respectively.
-Refer to Table 12-5.If Jewel is given a 20% interest in the partnership in exchange for $90,000 cash,the entry to record her investment includes a:

• A) credit to Jim, Capital for $7,000
• B) credit to Cash for $90,000
• C) credit to Jewel, Capital for $90,000
• D) credit to Jewel, Capital for $118,000

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Definitions:

Gross Domestic Product

The total monetary value of all final goods and services produced within a country's borders in a specific time period.

Consumer Goods

Products and services that satisfy the needs and wants of consumers directly.

Capital Goods

Goods that are used in producing other goods, rather than being bought by consumers directly.

Total Spending

Total spending refers to the aggregate amount of money spent by individuals, businesses, and government on goods and services within a specific time frame.