Exam 12: Accounting for Partnerships and Limited Liability Companies

Benson and Orton are partners who share income in the ratio of 1:3 and have capital balances of $70,000 and $30,000, respectively. Ramsey is admitted to the partnership and is given a 40% interest by investing $20,000. What is Orton's capital balance after admitting Ramsey?

In the distribution of income, the net income is less than the salary and interest allowances granted; the remaining balance will be a negative amount that must be divided among the partners as though it were a loss.

When a new partner is admitted by making an investment of assets in the partnership and the new partner has to pay a premium for admission, a bonus is divided among the old partners' capital accounts.

Match each statement to the appropriate term (a-h). -A voluntary association of two or more persons who co-own a business for profit

Watson purchased one-half of Dalton's interest in the Patton and Dalton Partnership for $45,000. Prior to the investment, land was revalued to a market value of $135,000 from a book value of $93,000. Patton and Dalton share net income equally. Dalton had a capital balance of $35,000 prior to these transactions.​Required (a) Provide the journal entry for the revaluation of land. (b) Provide the journal entry to admit Watson.