Question

Nate is investing in a partnership with David. Nate contributes as part of his initial investment, Accounts Receivable of $60,000; an Allowance for Doubtful Accounts of $9,000; and $6,000 cash. The entry that the partnership makes to record Nate's initial contribution includes a______ a. debit to Allowance for Doubtful Accounts for $9,000 b. credit to Nate, Capital for $57,000 c. debit to Accounts Receivable for $51,000 d. credit to Nate, Capital for $66,000.

Answer 1

Answer:

b. credit to Nate, Capital for $57,000

Explanation:

Nate is investing in the business and All his investment will be recorded by the partners as follow

Dr. Receivable                                        $60,000

Dr. Cash                                                  $6,000

Cr. Nate Capital Account                       $57,000

Cr. Allowance for Doubtful Accounts $9,000

All the receivables are become the receivables of the business.

Cash is also added to the business cash.

Allowance for Doubtful Accounts are also recorded against the receivable added.

Net effect of all the above account will be recorded as Capital investment

Answer 2

Answer:

CREDIT to Nate capital for $57000 ( B )

Explanation:

NATE  contributions

accounts receivables = $60000

allowance for doubtful accounts = $9000 ( FOR DEBTORS )

cash = $6000

therefore the entry the partnership makes to record Nate's initial contribution includes = ACCOUNTS RECEIVABLE + CASH - allowance for doubtful accounts

= 60000 + 6000 - 9000 = $57000