Lauren and Elizabeth Are Partners

question 27

Multiple Choice

Lauren and Elizabeth are partners.Lauren has a capital balance of $125,000 and Elizabeth has a capital balance of $110,000.Harry invested $100,000 to acquire an ownership interest of 30%.The journal entry to record the receipt of Harry's contribution will ________.

• A) decrease Lauren, Capital
• B) increase Elizabeth, Capital
• C) decrease Cash
• D) decrease Harry, Capital

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Definitions:

Factory Overhead

All indirect costs associated with manufacturing, such as utilities, maintenance, and salaries of supervisors, not directly tied to a specific product.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and are an integral part of the finished product.

Conversion Costs

The sum of labor and overhead expenses incurred in the process of converting raw materials into finished goods.

Work In Process

Goods and materials that are partially completed in the manufacturing process, representing an inventory category on the balance sheet.