Raul and Bianca are partners. Raul has a capital balance of $50,000 and Bianca has a capital balance of $36,000. Bianca sells half of her ownership interest to Bill and Bianca accepts $20,000 from Bill. Which of the following is true of the journal entry to record this transaction?

Question

Quizplus · Accepted Answer

Bianca sold half of her ownership interest to Bill for $20,000, so her capital balance would decrease by half, or $18,000 (36,000/2). Bill is not buying any of Raul's ownership interest, so Raul's capital balance should remain the same. Therefore, the journal entry should be a credit to Bill, Capital for $18,000 and a debit to Bianca, Capital for $18,000.

Raul and Bianca Are Partners