Reference no: EM132756459
Problem 1: Norton invested $40,000 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 NOT include:
A. a debit to cash for $40,000
B. a credit to Maxwell's capital account for $2,000
C. a credit to Slade's capital account for $3,000
D. a credit to Norton's capital account for $30,000
Problem 2: Norton was paid $25,000 from the partnership cash account for his withdrawal from the partnership of Maxwell, Slade, and Norton. Their capital balances were $40,000, $60,000, and $35,000, respectively. Income and loss is shared according to the ratio of equity balances. The journal entry to record the withdrawal of Norton would NOT include:
A. a credit to cash for $25,000
B. a debit to Maxwell's capital account for $2,000
C. a credit to Slade's capital account for $6,000
D. a debit to Norton's capital account for $35,000