Sally Smythe Enters into a Partnership by Contributing the Following

question 8

Multiple Choice

Sally Smythe enters into a partnership by contributing the following: Cash $15,000;Accounts Receivable $4,500;Machinery which cost $3,000 and has a fair market value of $2,125;and accounts payable of $1,200.What amount will be recorded in her capital account?

• A)$21,625
• B)$20,425
• C)$22,500
• D)$21,300

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Definitions:

ASE Certification

A certification granted by the National Institute for Automotive Service Excellence to individuals who demonstrate knowledge and proficiency in automotive repair and service.

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Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment by calculating the difference between the present value of cash inflows and outflows.

Present Value

The valuation in today's terms of a future sum or series of financial inflows, taking into account a particular rate of return.