The Trial Balance of WM Partnership Is as Follows

question 11

Multiple Choice

The trial balance of WM Partnership is as follows:
Wilfred and Mike decide to incorporate their partnership.The partnership's books will be closed,and new books will be used for W & M Corporation.The following additional information is available:
1.The estimated fair values of the assets follow:
2.All assets and liabilities are transferred to the corporation.
3.The common stock is $10 par.Wilfred and Mike receive a total of 10,000 shares.
4.The partners share profits and losses in the ratio 7:3.
-Based on the preceding information,the journal entry on W & M Corporation's books to record the assets and the issuance of the common stock will include a credit to Additional Paid-In Capital for:

• A)$0.
• B)$81,000.
• C)$31,000.
• D)$50,000.

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Definitions:

Productive Advantage

A situation where a person or entity can produce goods or services at a lower opportunity cost than others.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits one misses out on when choosing one option over another.

Bushel

A unit of volume that is used in the United States for measuring agricultural commodities, usually grains.

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A long, curved fruit with soft, pulpy flesh and yellow skin when ripe, commonly eaten as a staple food or snack.