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:

Manufacturing Costs

The aggregate costs associated with the process of producing finished goods, including materials, labor, and overhead.

Direct Materials

Raw materials that are directly traceable to the production of finished goods.

Cost Of Goods Manufactured

The total production cost of goods that were completed during a specific accounting period, including direct materials, direct labor, and manufacturing overhead.

Manufacturing Overhead

All indirect costs associated with manufacturing a product, such as utilities, supplies, and salaries not directly tied to production.