Solution-Evaluate how the partnership would record the

Evaluate how the partnership would record the admission

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Question 1: Wallace and Simpson formed a partnership with Wallace contributing $60,000 and Simpson contributing $40,000. Their partnership agreement calls for the income (loss) division to be based on the ratio of capital investments. Wallace sold one-half of his partnership interest to Prince for $55,000 when his capital balance was $78,000. The partnership would record the admission of Prince into the partnership as:

Option A) Debit Wallace, Capital $30,000; credit Prince, Capital $30,000.

Option B) Debit Wallace, Capital $55,000; credit Prince, Capital $55,000.

Option C) Debit Prince, Capital $55,000; credit Wallace, Capital $55,000.

Option D) Debit Wallace, Capital $39,000; credit Prince, Capital $39,000.

Option E) Debit Wallace, Capital $39,000; debit Cash $16,000; credit Prince, Capital $55,000.

Reference no: EM132482970

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Evaluate how the partnership would record the admission

Reference no: EM132482970

Reference no: EM132482970

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