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In the AD partnership, Allen's capital is $140,000, and Daniel's is $40,000, and they share...

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Accounting

In the AD partnership, Allen's capital is $140,000, and Daniel's is $40,000, and they share income in a 3:1 ratio, respectively. They decide to admit David to the partnership. Each of the following questions is independent of the others.

Refer to the information provided above. Assume that David invests $50,000 for a one-fourth interest. Goodwill is to be recorded. The journal to record David's admission into the partnership will include:

Multiple Choice

  • a credit to cash for $50,000.
  • a debit to goodwill for $7,500.
  • a credit to David, Capital for $60,000.

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