Reference no: EM132756457

Problem 1: Norton invested $30,000 in the partnership of Maxwell and Slade. The capital balance of Maxwell and Slade were $30,000 and $60,000, respectively. Norton was to receive a 25% interest in the new partnership. The journal entry to record this transaction would NOT include:

A. a debit to cash for $30,000

B. a credit to Norton's capital account for $30,000

C. a credit to Slade's capital account for $7,500

D. a credit to Slade's capital account for $37,500

Problem 2: Norton invested $20,000 in the partnership of Maxwell and Slade. The capital balance of Maxwell and Slade were $40,000 and $60,000, respectively. Income and loss is shared according to the ratio of equity balances. Norton was to receive 25% interest in the new partnership. The journal entry to record this transaction would include:

A. a credit to Maxwell's capital account for $4,000

B. a credit to cash for $20,000

C. a credit to Slade's capital account for $6,000

D. a credit to Norton's capital account for $30,000