Exam 12: Accounting for Partnerships and Limited Liability Companies

What is a partnership? List three advantages and three disadvantages of the partnership form of business organization.

Holly and Luke formed a partnership, investing $240,000 and $80,000, respectively. Determine their participation in the year's net income of $380,000 under each of the following independent assumptions: (a)No agreement concerning division of net income (b)Divided in the ratio of original capital investment (c)Interest at the rate of 15% allowed on original investments and the remainder divided in the ratio of 2:3 (d)Salary allowances of $50,000 and $70,000, respectively, and the balance divided equally (e)Allowance of interest at the rate of 15% on original investments, salary allowances of $50,000 and $70,000, respectively, and the remainder divided equally

When a partner invests noncash assets in a partnership, the assets are recorded at the partner's book value.

Dissolution is the term that solely means to liquidate the partnership.

Tomas and Saturn are partners who share income in the ratio of 3:1. Their capital balances are $80,000 and $120,000, respectively. The partnership generated net income of $30,000. What is Saturn's capital balance after closing the revenue and expense accounts to the capital accounts?

Gentry, sole proprietor of a hardware business, decides to form a partnership with Noel. Gentry's accounts are as follows:? Book Value Market Value Cash \ 25,000 \ 25,000 Accounts Receivable (net) 52,000 45,000 Inventory 112,000 125,000 Land 40,000 100,000 Buil ding (net) 300,000 340,000 Accounts Payable 25,000 25,000 Mortgage Payable 145,000 145,000 Noel agrees to contribute $80,000 for a 20% interest. Journalize the entries to record (a) Gentry's investment and (b) Noel's investment.

A partnership requires only an agreement between two or more persons to organize.

Hannah Johnson contributed equipment, inventory, and $53,000 cash to a partnership. The equipment had a book value of $25,000 and a market value of $28,000. The inventory had a book value of $50,000 but only had a market value of $15,000 due to obsolescence. The partnership also assumed a $12,000 note payable owed by Hannah that was originally used to purchase the equipment.​What amount should be recorded to Hannah's capital account?

What amount will be recorded to the building account?

Match each statement to the appropriate term (a-h): -The winding-up process of a partnership

A partner withdraws from a partnership by selling her interest to another person who currently is not associated with the firm. As a result of this transaction, the capital account balance of the other partners in the partnership

A change in the ownership of a partnership results in the

The capital accounts of Heidi and Moss have balances of $90,000 and $65,000, respectively, on January 1, the beginning of the current fiscal year. On April 10, Heidi invested an additional $8,000. During the year, Heidi and Moss withdrew $40,000 and $32,000, respectively. Revenues were $540,000 and expenses were $420,000 for the year. The articles of partnership make no reference to the division of net income. Required (1)Prepare a statement of partners' equity for the partnership of Heidi and Moss. (2)Journalize the entries to: (a)Close the revenue and expenses account. (b)Close the drawing accounts.?

For tax purposes, a limited liability company may elect to be treated as a partnership.

There are only four legal structures to form and operate a business.

The remaining cash of a partnership (after creditors have been paid) upon liquidation is divided among partners according to their

Gavin invested $45,000 in the Jason and Kelly Partnership for ownership equity of $45,000. Prior to the investment, land was revalued to a market value of $320,000 from a book value of $200,000. Jason and Kelly share net income in a 1:2 ratio. (a) Provide the journal entry for the revaluation of land. (b) Provide the journal entry to admit Gavin.

As part of the initial investment, Jackson contributes accounts receivable that had a balance of $22,500 in the accounts of a sole proprietorship. Of this amount, $3,000 is deemed completely worthless. For the remaining accounts, the partnership will establish a provision for possible future uncollectible accounts of $1,500. The amount debited to Accounts Receivable for the new partnership is

When a new partner is admitted to a partnership, there should be a (n)

Based on this information, the statement of partners' equity would show what amount as total capital for the partnership on December 31?