24) 24) Issac and Karl are partners. Issac has a capital balance of $25,000 and Karl has a capital balance of $20,000. Bill invested $15,000 to acquire an ownership interest of 30%. How does this transaction affect the balance sheet items? A) Asset increases and the equity remains unchanged. B) Assets increase, liabilities decrease, and the equity remain unchanged. C) Assets increase and the equity decreases. D) Both assets and equity increase. 25) Treasury stock is a: A) contra asset account. C) contra equity account. B) liability account D) contra liability account. 26) Corporate ownership is a very popular type of ownership in the United States. Which of the following is a major reason that corporate ownership is popular? A) Stockholders have limited liability for the debts of the corporation B) A corporation is usually managed by the owners. C) The life of a corporation is limited by the death of the owner. D) Most corporations are small or medium-sized. 27) 27) Jade signs a $6,500, 8.5%, six-month note dated November 1, 2013. The interest expense recorded for this note in 2013 will be: A) $276. B) $92 C) $184. D) $133. 28) The balance sheet of Ryan and Peter firm as on December 31, 2014, is given below. 28) $15,000 25,000 Assets Cash Accounts Receivable Furniture Equipment Other assets Total assets Liabilities $15,000 Accounts Payable 12,000 Other liabilities 25,000 Partner's Equity 40,000 Ryan, Capital 8,000 Peter, Capital $100,000 Total liabilities and partner's equity 30,000 30,000 $100,000 Ryan and Peter share profits in the ratio 3:2. They have decided to liquidate the partnership with immediate effect. After completing all the liquidation procedures, the business is left with $34,000 cash. As a result, Ryan will receive: A) $20,400 B) $17,000 C) $30,000 D) $13,600 29) 29) Rick Co. purchases 7,000 shares of its own $2 par value common stock for $160 per share. Which of the following is the correct journal entry to record this transaction? A) Debit Cash $2,240,000 and credit Treasury Stock-Common $2,240,000. B) Debit Treasury Stock-Common $1,120,000 and credit Cash $1,120,000. C) Debit Common Stock-$2 Par Value $2,240,000 and credit Cash $2,240,000 D) Debit Cash $2,240,000, and credit Paid-In Capital in Excess of Par-Common $2,240,000. 30) 30) Land was originally purchased for $20,000. It is sold for $20,000 in cash. How does the sale affect the accounting equation? A) Assets increase by $20,000; equity increases by $20,000. B) Assets increase by $20,000; assets decrease by $20,000. C) Assets increase by $20,000; liabilities decrease by $20,000. D) Assets increase by $20,000; liabilities increase by $20,000