Floyd and Merriam Start a Partnership Business on June 12,2019 $$\begin{array} { | l | r | } \hline \text { Floyd } & \$ 54,000 \\\hline \text { Merriam } & 22,000 \\\hline\end{array}$$

question 76

Multiple Choice

Floyd and Merriam start a partnership business on June 12,2019.Their capital account balances as of December 31,2020 stood as follows: $$\begin{array} { | l | r | } \hline \text { Floyd } & \$ 54,000 \\\hline \text { Merriam } & 22,000 \\\hline\end{array}$$ Floyd agrees to sell half of his share to Ramelow in exchange for $32,000 cash.Which of the following is the correct journal entry in the books of the firm for the above transfer of interest?

• A) \[\begin{array} { |l | c | c | }
• \hline \text { Cash } & 32,000 & \\
• \hline \text { Ramelow, Capital } & & 32,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | c | c | }
• \hline \text { Floyd, Capital } & 27,000 & \\
• \hline \text { Ramelow, Capital } & & 27,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | c | c | }
• \hline \text { Cash } & 32,000 & \\
• \hline \text { Floyd, Capital } & 27,000 & \\
• \hline \text { Ramelow, Capital } & & 59,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Cash } & 32,000 & \\
• \hline \text { Floyd, Capital } & & 5000 \\
• \hline \text { Ramelow, Capital } & & 27,000 \\
• \hline
• \end{array}\]

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Definitions:

Compound-Interest

Interest calculated on the initial principal, which also includes all of the accumulated interest of previous periods of a deposit or loan.

Guaranteed Interest Rates

Interest rates promised to remain constant over a defined period, often associated with savings instruments like fixed deposits.

Maturity Value

The amount payable to an investor at the end of a fixed term investment.

Financial Planning

The process of creating strategies for managing finances to achieve personal financial goals.