Question 3) Trumming and Nancy are successful partners. They share profits and losses equally. Their current capital account balances are $20 and $10 respectively. They decide to admit Tyler to the partnership.

Tyler invests $25 for a 20 per cent share of the partnership. The journal entry to admit Tyler will include:

1. debit Trumming, capital $11.00

2. debit Nancy, capital $9.75

3. credit Trumming, capital $9.75
4. credit Nancy, capital $7.00

Question 4) A machine with a cost of $90 000 has an estimated residual value of $30 000 and an estimated life of four years or 20 000 hours. It is to be depreciated by the units-of-activity method. What is the amount of depreciation for the second full year, during which the machine was used 5 500 hours?

1. $20,000

2. $16,500

3. $30,000

4. $22,500