Sole Proprietors, Johnny and Simon, Decide to Form a Partnership

question 29

Multiple Choice

Sole proprietors, Johnny and Simon, decide to form a partnership. Johnny contributes inventory with a fair value of $20 000, machinery with a fair value of $120 000 and it is agreed that the partnership will take over Johnny's bank loan of $50 000. Assuming the partnership agreement states that the balance of partnership capital will be equal to the fair value of the net assets contributed, what is the amount recorded in Johnny's capital account?

• A) $70 000
• B) $90 000
• C) $120 000
• D) $140 000

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Definitions:

Long-term Employment

Employment that is intended to last for an extended period, often offering greater job security and benefits.

Emotional Labor

Involves the management and regulation of emotions by individuals, especially in professional settings, to fulfill job requirements or meet organizational expectations.

Job Satisfaction

Job satisfaction is the level of contentment employees feel about their work, which can affect their motivation, productivity, and overall well-being.

Emotions

Complex psychological states involving physiological arousal, expressive behaviors, and conscious experience, affecting one’s thoughts and actions.