Tom and Jerry Are Two Sole Traders That Have Joined

question 41

Multiple Choice

Tom and Jerry are two sole traders that have joined together to form a partnership by combining their net assets.
Jerry contributes:

What will be the amount shown in the allowance for doubtful debts account in the balance sheet prepared after the formation of the partnership of Tom and Jerry?

• A) Nil
• B) $500
• C) $1000
• D) $1500

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Definitions:

Overdue

Refers to something being past its expected or scheduled time, often used in the context of payments or tasks.

Primarily Liable

Refers to the party that bears the first or main responsibility for fulfilling an obligation or debt.

Secondarily Liable

Liable for paying the amount designated on an instrument if the primarily liable party defaults.

Signature Liability

Liability attributed because of a party’s signature on an instrument.