Ruby and Anita Are Partners

question 36

Multiple Choice

Ruby and Anita are partners.Ruby has a capital balance of $230,000 and Anita has a capital balance of $200,000.Denis invests in a building with a current market value of $150,000 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 $150,000 and Denis,capital will be credited for $150,000.
• B)Ruby,capital and Anita,capital will be debited for $75,000 each and Denis,capital will be credited for $150,000.
• C)Ruby,capital and Anita,capital will be credited for $75,000 each and Denis,capital will be debited for $150,000.
• D)Building will be debited for $150,000,Ruby,capital and Anita,capital will be credited for $75,000 each.

---

Definitions:

Restrictive Covenant

A clause typically in an employment or real estate contract that limits what the buyer or employee can do, ensuring certain actions are refrained from.

Tenants in Common

A form of co-ownership where individuals hold undivided interests in a property without rights of survivorship, allowing different ownership shares.

Joint Tenancy

A form of property ownership in which two or more individuals hold equal rights to the entire property, and upon the death of one, the survivor(s) automatically assume the deceased's part.

Severing

The act of legally separating or dividing property rights, often in the context of joint tenancies turning them into tenancies in common.