Ruby and Anita Are Partners

question 171

Multiple Choice

Ruby and Anita are partners.Ruby has a capital balance of $270,000 and Anita has a capital balance of $180,000.Denis contributes a building with a current market value of $170,000 to acquire an interest in the new partnership.Which of the following is TRUE of the journal entry to record this transaction? (Assume no bonus to any partner.)

• A) Building will be debited for $170,000, Ruby, Capital and Anita, Capital will be credited for $85,000 each.
• B) Building will be debited for $170,000 and Denis, Capital will be credited for $170,000.
• C) Ruby, Capital and Anita, Capital will be debited for $85,000 each and Denis, Capital will be credited for $170,000.
• D) Ruby, Capital and Anita, Capital will be credited for $85,000 each and Denis, Capital will be debited for $170,000.

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Definitions:

Preferred Dividends

Dividends that are paid to preferred shareholders, typically at a fixed rate, before any dividends are paid to common shareholders.

Treasury Stock

Shares bought back by the issuing company, reducing the amount of outstanding stock on the open market.

Corporate Stock

Equity securities representing ownership shares in a corporation, entitling shareholders to dividends and a claim on assets and earnings.

Reacquired

Refers to the action of a company purchasing back its own shares or securities from investors.