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Floyd and Merriam start a partnership business on June 12, 2025. Their capital account balances as of December 31, 2020 stood as follows: Floyd Merriam They agreed to admit Ramelow into the business for a one-fifth interest in the new partnership. Ramelow contributes $34,000 cash in exchange for the partnership interest. Assume that Floyd and Merriam shared profits and losses in a 3:1 ratio before the admission of Ramelow. Which of the following is the correct journal entry to record the above admission? O Cash 34,000 Floyd, Capital Merriam, Capital Ramelow, Capital O Cash Ramelow, Capital O Merriam, Capital Floyd, Capital Ramelow, Capital O Cash Merriam, Capital Floyd, Capital $55,000 15,000 34,000 20,800 13,200 34,000 9900 3300 20,800 34,000 34,000 13,200 20,800

Floyd and Merriam start a partnership business on June 12, 2025. Their capital account balances as of December 31, 2020 stood as follows: Floyd Merriam They agreed to admit Ramelow into the business for a one-fifth interest in the new partnership. Ramelow contributes $34,000 cash in exchange for the partnership interest. Assume that Floyd and Merriam shared profits and losses in a 3:1 ratio before the admission of Ramelow. Which of the following is the correct journal entry to record the above admission? O Cash 34,000 Floyd, Capital Merriam, Capital Ramelow, Capital O Cash Ramelow, Capital O Merriam, Capital Floyd, Capital Ramelow, Capital O Cash Merriam, Capital Floyd, Capital $55,000 15,000 34,000 20,800 13,200 34,000 9900 3300 20,800 34,000 34,000 13,200 20,800

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Floyd and Merriam start a partnership business on June 12, 2025. Their capital account balances as of December 31, 2020, stood as follows: - Floyd: $55,000 - Merriam: $15,000 They agreed to admit Ramelow into the business for a one-fifth interest in the new partnership. Ramelow contributes $34,000 cash in exchange for the partnership interest. Assume that Floyd and Merriam shared profits and losses in a 3:1 ratio before the admission of Ramelow. Which of the following is the correct journal entry to record the above admission? Options: 1. - **Cash**: 34,000 - **Floyd, Capital**: 9,900 - **Merriam, Capital**: 3,300 - **Ramelow, Capital**: 20,800 2. - **Cash**: 34,000 - **Ramelow, Capital**: 34,000 3. - **Merriam, Capital**: 20,800 - **Floyd, Capital**: 13,200 - **Ramelow, Capital**: 34,000 4. - **Cash**: 34,000 - **Merriam, Capital**: 13,200 - **Floyd, Capital**: 20,800
Transcribed Image Text:Floyd and Merriam start a partnership business on June 12, 2025. Their capital account balances as of December 31, 2020, stood as follows: - Floyd: $55,000 - Merriam: $15,000 They agreed to admit Ramelow into the business for a one-fifth interest in the new partnership. Ramelow contributes $34,000 cash in exchange for the partnership interest. Assume that Floyd and Merriam shared profits and losses in a 3:1 ratio before the admission of Ramelow. Which of the following is the correct journal entry to record the above admission? Options: 1. - **Cash**: 34,000 - **Floyd, Capital**: 9,900 - **Merriam, Capital**: 3,300 - **Ramelow, Capital**: 20,800 2. - **Cash**: 34,000 - **Ramelow, Capital**: 34,000 3. - **Merriam, Capital**: 20,800 - **Floyd, Capital**: 13,200 - **Ramelow, Capital**: 34,000 4. - **Cash**: 34,000 - **Merriam, Capital**: 13,200 - **Floyd, Capital**: 20,800
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Step 1 Introduction

The partnership comes into existence when two or more persons agree to do the business and further share profits and losses in a desired ratio. The old partnership gets dissolved when new partner is admitted or old partner is retired. 

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