Question

Nate is investing in a partnership with Deidre. Nate contributes as part of his initial investment, Accounts Receivable of $60700; an Allowance for Doubtful Accounts of $9400; and $5200 cash. The entry that the partnership makes to record Nate’s initial contribution includes a:_______
a. Credit to Nate, Capital for $64800.

b. Debit to Allowance for Doubtful Accounts for $8700.

c. Debit to Accounts Receivable for $50800.

d. Credit to Nate, Capital for $56100.

Answer 1

Answer:

Nate's capital will be credited with $56500

Note; the correct answer is not in the options provided

Explanation:

Given Data:

Account receivable = $60700

Allowance for doubtful account = $9400

Cash flow = $5200

using the formula;

Net accounts receivable =Account receivable- Allowance for    

                                                                           doubtful account

Substituting, we have

Net accounts receivable =  $60700-$9400

                                           = $51300

The formula for calculating total initial contribution is given as;

Total initial contribution = Cash flow + net account receivable

Substituting into the formula, we have

Total initial contribution = $5200 + $51300

                                         =$56500

Therefore, Nate's capital will be credited with $56500