Table 12-7 Bill, Bob, and Bo, Are Partners in the Trendy Company

question 98

Multiple Choice

Table 12-7
Bill, Bob, and Bo, are partners in the Trendy Company, a retailer of inexpensive kids' wear. They share profits and losses in a 1:4:5 ratio and have decided to expand their business territory. They have agreed to admit Burt to the partnership for a cash investment. Their capital balances are currently $60,000, $100,000, and $140,000, respectively.
-Refer to Table 12-7.Burt has been offered a 15% interest in the firm for $130,000.Assuming Burt takes the offer,the entry to record his investment in the partnership includes a:

• A) credit to gain on sale of partnership interest for $85,000
• B) debit to Burt, Capital for $45,000
• C) credit to Burt, Capital for $45,000
• D) debit to Cash for $130,000

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Definitions:

Business Activities

Actions or tasks performed by businesses that are intended toward the production of goods or services, financial gain, or organizational growth.

Firm Offer

In contract law, an offer that explicitly states it will remain open for a specified period of time, during which it cannot be revoked by the offeror.

Irrevocable

Something that cannot be changed, revoked, or undone once established or agreed upon.

Writing

The act, process, or practice of recording thoughts, ideas, or information on a surface for communication or documentation.