In their business partnership, George has an ownership interest of 56 % and Ben has an ownership interest of 44 %. In the current year, they purchase equipment for $9,800. In order to finance the equipment purchase, George makes a contribution of $6,700 and Ben makes a contribution of $3,100 to the partnership. Based on the information provided, which of the following is true regarding the partnership balance sheet?

(A) George, Capital will increase by $5,488 and Ben, Capital will increase by $4,312.

(B) George, Capital will increase by $9,800 and Ben, Capital will remain unchanged.

(C) Both George, Capital and Ben, Capital will increase by $9,800.

(D) George, Capital will increase by $6,700 and Ben, Capital will increase by $3,100.

Question

Business

Gilbert Ryan

7 April, 15:47

In their business partnership, George has an ownership interest of 56 % and Ben has an ownership interest of 44 %. In the current year, they purchase equipment for $9,800. In order to finance the equipment purchase, George makes a contribution of $6,700 and Ben makes a contribution of $3,100 to the partnership. Based on the information provided, which of the following is true regarding the partnership balance sheet?

(A) George, Capital will increase by $5,488 and Ben, Capital will increase by $4,312.

(B) George, Capital will increase by $9,800 and Ben, Capital will remain unchanged.

(C) Both George, Capital and Ben, Capital will increase by $9,800.

(D) George, Capital will increase by $6,700 and Ben, Capital will increase by $3,100.

+2

Answers (1)

Know the Answer?

Javon Alvarado · Answer 1

(D) George, Capital will increase by $6,700 and Ben, Capital will increase by $3,100.

Explanation:

Transaction for the event

Dr. Equipment (Asset) 9800

Cr. George (Capital A/c) 6700

Cr. Ben (Capital A/c) 3100

So.

George, Capital will increase by $6,700 and Ben, Capital will increase by $3,100 on the basis of their contribution in the purchase of equipment. So option D is true based on this event.