Tim and Michelle Have Decided to Form a Partnership with a 60/40

question 88

Multiple Choice

Tim and Michelle have decided to form a partnership with a 60/40 partnership interest ratio.Tim contributes $7,500 cash and $1,500 in merchandise inventory.While journalizing this transaction ________.

• A)Tim,Capital will be debited for $9,000
• B)Tim,Capital will be credited for $9,000
• C)Tim,Capital will be credited for $6,000 and Michelle,Capital will be credited for $4,500
• D)Tim,Capital will be debited for $6,000 and Michelle,Capital will be debited for $4,500

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Definitions:

Dividend Paid

Cash or stock distributed by a company to its shareholders from its profits or reserves as a return on investment.

Unrealised Profits

Profits that have been recorded on the books through an accounting entry but have not actually been realized through the receipt of cash or other assets.

AASB 128

The Australian Accounting Standards Board’s standard on Investments in Associates and Joint Ventures, outlining the accounting for interests in joint ventures and associates.

Identification Requirements

The criteria or documents required to establish the identity of an individual or entity in legal or financial transactions.