Exam 16: Accounting for Partnerships

Arthur, Barnett and Cummings form a partnership. Arthur contributes $250,000 cash and Barnett contributes $230,000 in cash. Cummings contributes equipment worth $255,000. Prepare the single journal entry to record the formation of this partnership.

Armstrong plans to leave the FAP Partnership. The recorded balance in her capital account is $48,000. The remaining partners, Peters and Floyd, agree to pay Armstrong $58,000 cash. The partners have agreed to share income and loss equally. Prepare the journal entry to record the transaction.

Partner return on equity is calculated as ______________________________.

Miller and Reising formed a partnership. Miller contributed land valued at $90,000 and a building valued at $115,000. Reising contributed $90,000 cash. In addition, the partnership assumed responsibility for Miller's $85,000 mortgage payable associated with the land and building. What are the balances of the partners' capital accounts after these transactions have been recorded?

Admitting a partner into a partnership by accepting assets is a personal transaction between one or more current partners and the new partner.

During the closing process, partner's capital accounts are _______________ for their share of net income and _________________ for their share of net loss.

Accounting procedures for all items are the same for both C corporations and S corporations in all aspects.

Partners can invest both assets and liabilities into a partnership.

Benson is a partner in B&D Company. Benson's share of the partnership income is $18,600 and her average partnership equity is $155,000. Her partner return on equity equals 8.33.

Groh and Jackson are partners. Groh's capital balance in the partnership is $64,000 and Jackson's capital balance is $61,000. Groh and Jackson have agreed to share equally in income or loss. Groh and Jackson agree to accept Block with a 20% interest. Block will invest $35,000 in the partnership. The bonus that is granted to Groh and Jackson equals:

Mutual agency means

An unincorporated association of two or more persons to carry on a business for profit as co-owners is a(n):

Web Services is organized as a limited partnership, with Wren Littlefeather as one of its partners. Wren's capital account began the year with a balance of $87,000. During the year, Wren's share of the partnership income was $60,000 and she received $25,000 in distributions from the partnership. What is Wren's partner return on equity?

A partnership that has two classes of partners, general and limited, where the limited partners have no personal liability beyond the amounts they invest in the partnership and no active role in the partnership except as specified in the partnership agreement, is a:

When a partner leaves a partnership, the present partnership ends, but the business can still continue to operate.

During 2013, Schmidt invested $75,000 and Baldwin invested $90,000 in a partnership. They agreed that Baldwin would get a salary allowance of $30,000 and they would share any remaining income or loss equally. During 2013 the partnership earned net income of $300,000 and they each withdrew $12,000 from the partnership. Which of the following statements is correct?

A partner can be admitted into a partnership by ________________________ or by ______________________________.

When a partnership is liquidated, which of the following is not true?

Renee Jackson is a partner in Sports Promoters. Her beginning partnership capital balance for the current year is $55,000 and her ending partnership capital balance for the current year is $62,000. Her share of this year's partnership income was $5,250. What is her partner return on equity?

When a partner invests in a partnership, his/her capital account is __________ for the invested amount.