The trial balance of WM Partnership is as follows: DebitCreditCash$25,000 Accounts Receivable (net) 30,000 Inventory 50,000 Equipment (net) 95,000 Accounts Payable $50,000 Wilfred, Capital 100,000 Mike, Capital 50,000 Total$200,000 $200,000 Wilfred and Mike decide to incorporate their partnership. The partnership's books will be closed, and new books will be used for W & M Corporation. The following additional information is available: 1. The estimated fair values of the assets follow: Accounts Receivable$26,000 Inventory 46,000 Equipment 84,000 2. All assets and liabilities are transferred to the corporation. 3. The common stock is $10 par. Wilfred and Mike receive a total of 10,000 shares. 4. The partners share
profits and losses in the ratio 7:3. Based on the preceding information, the journal entry on the partnership's books to record distribution of stock to prior partners will include a debit to Mike, Capital for:
A. $31,500.
B. $42,000.
C. $38,010.
D. $44,300.
Answer: D
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