Homework SourseSuppose that Chris Vanguard and Brian Smith form a partnersh
Suppose that Chris Vanguard and Brian Smith form a partnership to sell yard equipment. Brian Smith contributes cash of $25,000 and office furniture with a cost of $15,000, accumulated depreciation of $5,000, and a current market value of $8,000. Which journal entry correctly records Smith’s contribution to the partnership?
Accounts
Debit
Credit
A.
Smith, Capital
35,000
Cash
25,000
Furniture
10,000
B.
Smith, Capital
33,000
Cash
25,000
Furniture
8,000
C.
Cash
25,000
Furniture
10,000
Smith, Capital
35,000
D.
Cash
25,000
Furniture
8,000
Smith, Capital
33,000
| Accounts | Debit | Credit | |
| A. | Smith, Capital | 35,000 | |
| Cash | 25,000 | ||
| Furniture | 10,000 | ||
| B. | Smith, Capital | 33,000 | |
| Cash | 25,000 | ||
| Furniture | 8,000 | ||
| C. | Cash | 25,000 | |
| Furniture | 10,000 | ||
| Smith, Capital | 35,000 | ||
| D. | Cash | 25,000 | |
| Furniture | 8,000 | ||
| Smith, Capital | 33,000 |
Solution
Option D is the correct answer
any asset contributed by partner is recorded at fair market value.
| Option D is the correct answer
any asset contributed by partner is recorded at fair market value. |
