Ruby and Anita are partners.Ruby has a capital balance of $230,000 and Anita has a capital balance of $200,000.Denis invests in a building with a current market value of $150,000 to acquire an interest in the new partnership.Which of the following is true of the journal entry to record this transaction? (Assume no bonus to any partner. )
A)Building will be debited for $150,000 and Denis,capital will be credited for $150,000.
B)Ruby,capital and Anita,capital will be debited for $75,000 each and Denis,capital will be credited for $150,000.
C)Ruby,capital and Anita,capital will be credited for $75,000 each and Denis,capital will be debited for $150,000.
D)Building will be debited for $150,000,Ruby,capital and Anita,capital will be credited for $75,000 each.

Question

Quizplus · Accepted Answer

The journal entry to record Denis' investment in the partnership is to debit the asset (building) for its market value of $150,000 and to credit Denis, capital for the same amount. This does not affect the capital balances of Ruby or Anita, so they are not involved in the journal entry. Therefore, option A is the correct answer.

Ruby and Anita Are Partners