Question

Raul and Bianca are partners. Raul has a capital balance of $50,000 and Bianca has a capital balance of $40,000. Bianca sells half of her ownership interest to Bill for $22,000. Which of the following is true of the journal entry to record this transaction?

A. Bianca, Capital is credited for $22,000 and Raul, Capital is debited for $22,000.

B. Bill, Capital is credited for $20,000 and Raul, Capital is debited for $22,000.

C. Bill, Capital is credited for $20,000 and Bianca, Capital is debited for $20,000.

D. Bianca, Capital is credited for $22,000 and Raul Capital is debited for $20,000

Answer 1

Answer:

C. Bill, Capital is credited for $20,000 and Bianca, Capital is debited for $20,000.

Explanation:

The journal entry to record this given transaction is shown below:

Bianca, Capital A/c $20,000

    To Bill, Capital A/c  $20,000

(Being the ownership interest is recorded)

The computation is shown below:

= Bianca capital balance × percentage of ownership interest

= $40,000 × 50%

= $20,000

Therefore, the correct option is c.