31) Lauren and Elizabeth are partners. Lauren has a capital balance of $125,000 and Elizabeth has a capital balance of $110,000. Harry invested $100,000 to acquire an ownership interest of 30%. The journal entry to record the receipt of Harry's contribution will:
A) decrease Lauren, Capital.
B) increase Elizabeth, Capital.
C) decrease Cash.
D) decrease Harry, Capital.
32) When an existing partner sells his interest to another party in a personal transaction:
A) it is considered a transaction between the partnership and the new party.
B) the old partnership will continue functioning, since the partner is replaced by another party without diluting the old partnership.
C) the journal entry simply debits the withdrawing partner's capital account and credits the new partner's capital.
D) the equity and assets in the balance sheet increase by the same amount.
Learning Objective 12-5
1) Whenever a partner mix in a partnership changes, the old partnership ceases to exist and a new partnership begins.
2) The death of a partner dissolves the partnership.
3) When a partner withdraws his interest for cash, the liabilities in the balance sheet remains unchanged.
4) If a withdrawing partner receives assets worth more than the book value of his equity, then he receives a bonus.
5) When a partner withdraws his interest in the partnership, both assets and equity will decrease.
6) If a withdrawing partner receives assets worth more than the book value of her equity, the capital accounts of the remaining partners decrease.
7) When a partner withdraws her equity for cash, the corresponding capital account will be closed.
8) When a partner dies, the partnership ceases to exist, and the deceased partner's estate will have o