Table 12-8 Jimmy, Johnny, and Joey Are Partners in the 3J Company

question 202

Multiple Choice

Table 12-8
Jimmy, Johnny, and Joey are partners in the 3J Company sharing profits and losses equally. Joey has decided to leave the partnership. After all accounts have been updated, the capital balances of the partners are currently $90,000, $120,000, and $70,000, respectively.
-Refer to Table 12-8.Assume Joey takes $50,000 in cash and a promissory note for $30,000.The entry to record his withdrawal would NOT include:

• A) debit to Joey, Capital for $70,000
• B) debit to Jimmy, Capital for $5,000
• C) credit to Note Payable for $30,000
• D) credit to Joey, Capital for $10,000

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Definitions:

Consumer Surplus

The contrast between the total sum consumers are ready and financially equipped to spend on a good or service, and the sum they actually spend.

Producer Surplus

The divergence between the price at which sellers are ready to offer a good or service and the price they actually obtain.

Economic Efficiency

A state in which resources are allocated in a way that maximizes the total benefit received by society from those resources.

Consumer Surplus

The divergence between the price consumers are willing to pay and what they really spend on a good or service.