Asked by Amanda Jones on May 11, 2024
Verified
Nate is investing in a partnership with Deidre. Nate contributes as part of his initial investment Accounts Receivable of $60000; an Allowance for Doubtful Accounts of $9000; and $6000 cash. The entry that the partnership makes to record Nate's initial contribution includes a
A) credit to Nate Capital for $66000.
B) debit to Accounts Receivable for $51000.
C) credit to Nate Capital for $57000.
D) debit to Allowance for Doubtful Accounts for $9000.
Accounts Receivable
Funds that customers owe to a company for products or services that have been provided but not yet compensated for.
Allowance for Doubtful Accounts
A contra-asset account used to estimate the portion of a company's accounts receivable that may not be collectible.
- Comprehend the accounting treatment of partner contributions and withdrawals.
Verified Answer
ZK
Zybrea KnightMay 16, 2024
Final Answer :
C
Explanation :
To record Nate's initial contribution, the partnership would make the following entry:
Debit: Accounts Receivable $60,000
Credit: Allowance for Doubtful Accounts $9,000
Credit: Nate Capital $57,000
Credit: Cash $6,000
This is because the Accounts Receivable and Allowance for Doubtful Accounts accounts are transferred from Nate's individual accounts to the partnership's accounts. The amount credited to Nate Capital is equal to the net value of the Accounts Receivable after the allowance is subtracted. Finally, the cash contribution is also credited to Nate Capital. Option C correctly reflects this entry.
Debit: Accounts Receivable $60,000
Credit: Allowance for Doubtful Accounts $9,000
Credit: Nate Capital $57,000
Credit: Cash $6,000
This is because the Accounts Receivable and Allowance for Doubtful Accounts accounts are transferred from Nate's individual accounts to the partnership's accounts. The amount credited to Nate Capital is equal to the net value of the Accounts Receivable after the allowance is subtracted. Finally, the cash contribution is also credited to Nate Capital. Option C correctly reflects this entry.
Learning Objectives
- Comprehend the accounting treatment of partner contributions and withdrawals.
Related questions
If the Retiring Partner's Interest Is Sold to One of ...
Brislin Humphreys and Watkins Share Income and Losses in a ...
194 Elam Kamins and Rubio Have Capital Balances of $150000 ...
A Change in the Ownership of a Partnership Results in ...
A Partner Withdraws from a Partnership by Selling Her Interest ...