The partners of Jones & Wesson agreed that Jones can sell his $50,000 investment in the firm to Smith. Smith pays Jones $60,000. The entry to record the transfer of capital to Smith will include a credit to Smith, Capital for $60,000.

Question

Quizplus · Accepted Answer

The entry to record the transfer of capital to Smith will include a credit to Smith, Capital for $50,000, which is the original investment amount. The additional $10,000 paid by Smith to Jones is a transaction between the two individuals and does not affect the capital account in the firm's books.

The Partners of Jones & Wesson Agreed That Jones Can