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

question 106

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) debit to Jim, Capital for $7,000
• B) credit to Joe, Capital for $21,000
• C) credit to Jewel, Capital for $90,000
• D) debit to Cash for $118,000

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Definitions:

Mens Rea

A legal principle meaning "guilty mind," referring to the intent or knowledge of wrongdoing that constitutes part of a crime.

Legally a Crime

An act or omission that violates statutory law, making it punishable by the government.

Defense of Property

A legal doctrine that allows an individual to use reasonable force to protect their property from being damaged or stolen.

Reasonable Force

The minimum amount of force necessary to protect oneself, others, or property while remaining legally justified under the circumstances.