Q1. Michael is investing in a partnership with Monica. Michael's contribution as part of his initial investment is: Accounts Receivable $80,000, Allowance for Doubtful Accounts of $12,000, and Cash $15,000. Michael's initial contribution in the partnership has the following entry:
A. debit to Accounts Receivable for $78,000
B. credit to Michael, Capital $83,000
C. debit to Allowance for Doubtful Accounts for $12,000
D. credit to Michael, Capital $92,000
Q2. In the partnership formed by Felix and Cristy, he is investing a truck with a book value of $15,000 and a fair value of $12,000. Cristy is investing a building with a book value of $40,000 and a fair value of $55,000 with a mortgage of $20,000. Determine the amount that Cristy's capital account should be recorded at.
A. $28,000
B. $40,000
C. $55,000
D. $20,000
Q3. Cristy and Elizabeth are entering into a partnership. Cristy contributes equipment that originally cost $65,000, but now has a book value of $10,000 and a fair value of $14,000. Determine the entry that the partnership makes to record Cristy's initial contribution.
A. credit to Accumulated Depreciation for $55,000
B. debit to equipment for $55,000
C. debit to equipment for $65,000
D. debit to equipment for $14,000
Q4. In the partnership formed by Felix and Cristy, he is investing a truck with a book value of $15,000 and a fair value of $12,000. Cristy is investing a building with a book value of $40,000 and a fair value of $55,000 with a mortgage of $20,000. Determine the amount the building should be recorded at.
A. $15,000
B. $20,000
C. $40,000
D. $55,000
Q5. Identify the item that should not be considered an expense of a partnership when determining income for Year 2014.
A. Salary expense to partners
B. Insurance expense
C. Supplies expense
D. Transportation expense