1/ Bloom and Plant organize a partnership on January 1. Bloom\'s initial investm

Question

1/ Bloom and Plant organize a partnership on January 1. Bloom's initial investment consists of $700 cash, $1,400 equipment and a $1,200 note payable reflecting a bank loan for the new business. Plant's initial investment is cash of $900. These amounts are the values agreed on by both partners. The journal entry to record Bloom's investment is:

Multiple Choice

Debit Cash $700; debit Equipment $1,400; credit Note Payable $1,200; credit Bloom, Capital $900.

Debit Cash $900; credit Bloom, Capital $900.

Debit Cash $700; debit Equipment $1,400; credit Bloom, Capital $2,800.

Debit Cash $700; debit Equipment $200; credit Bloom, Capital $900.

Debit Bloom, Capital $3,300; credit Common Stock $3,300.

2/

The following information is available regarding Grace Smit's capital account in Enterprise Consulting Group, a general partnership, for a recent year:

What is Smit's partner return on equity during the year in question?

Multiple Choice

29.9%

44.6%

28.1%

12.4%

13.2%

Beginning of the year balance $ 44,000 Share of partnership income $ 14,000 Withdrawals made during the year $ 8,200

Explanation / Answer

1 Debit Cash $700; debit Equipment $1,400; credit Note Payable $1,200; credit Bloom, Capital $900. 2 Ending capital balance = 44000+14000-8200= 49800 Average captital balance = (44000+49800)/2= 46900 Return on equity = 14000/46900= 29.9%

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