Floyd and Merriam Start a Partnership Business on June 12,2019 $$\begin{array} { | l | r | } \hline \text { Floyd } & \$ 50,000 \\\hline \text { Merriam } & 23,000 \\\hline\end{array}$$

Multiple Choice

Floyd and Merriam start a partnership business on June 12,2019.Their capital account balances as of December 31,2020 stood as follows: $$\begin{array} { | l | r | } \hline \text { Floyd } & \$ 50,000 \\\hline \text { Merriam } & 23,000 \\\hline\end{array}$$ They agreed to admit Ramelow into the business for a one-fifth interest in the new partnership.Ramelow contributes $27,000 cash in exchange for the partnership interest.Assume that Floyd and Merriam shared profits and losses in a 3:1 ratio before the admission of Ramelow.Which of the following is the correct journal entry to record the above admission?

A) $$\begin{array} { | c | c | c | } \hline \text { Cash } & 27,000 & \\\hline \text { Ramelow, Capital } & & 27,000 \\\hline\end{array}$$
B) $\begin{array}{|l|r|r|}\hline\text { Cash } & 27,000 & \\\hline \text { Merriam, Capital } & & 7000 \\\hline \text { Floyd, Capital } & & 20,000 \\\hline\end{array}$

C) $$\begin{array} { | c | r | r | } \hline \text { Merriam, Capital } & 20,000 & \\\hline \text { Floyd, Capital } & 7000 & \\\hline \text { Ramelow, Capital } & & 27,000 \\\hline\end{array}$$
D) $$\begin{array} { | l | r | r | } \hline \text { Cash } & 27,000 & \\\hline \text { Floyd, Capital } & & 5250 \\\hline \text { Merriam, Capital } & & 1750 \\\hline \text { Ramelow, Capital } & & 20,000 \\\hline\end{array}$$