Exam 12: Accounting for Partnerships

The following information is available regarding John Smith's capital account in Technology Consulting Group,a general partnership,for a recent year: What is Smith's partner return on equity during the year in question?

Regina Harrison is a partner in Pressed for Time.An analysis of Regina Harrison's capital account indicates that during the most recent year,she withdrew $20,000 from the partnership.Her share of the partnership's net loss was $16,000 and she made an additional equity contribution of $10,000.Her capital account ended the year at $150,000.What was her capital balance at the beginning of the year?

Kathleen Reilly and Ann Wolf decide to form a partnership on August 1.Reilly invested the following assets and liabilities in the new partnership: The note payable is associated with the building and the partnership will assume responsibility for the loan.Wolf invested $60,000 in cash and $105,000 in equipment in the new partnership.Prepare the journal entries to record the two partners' original investments in the new partnership.

Partner return on equity can be used by each partner to help decide whether additional investment or withdrawal of resources is best for that partner.

When a partner leaves a partnership,the present partnership ends.

Jane and Castle are partners and share equally in income or loss.Jane's current capital balance is $140,000 and Castle's is $130,000.Jane and Castle agree to accept Sean with a 30% interest in the partnership.Sean invests $108,000 in the partnership.The amount credited to Sean's capital account is:

Partnership accounting:

Shelby and Mortonson formed a partnership with capital contributions of $300,000 and $400,000,respectively.Their partnership agreement calls for Shelby to receive a $60,000 per year salary.Also,each partner is to receive an interest allowance equal to 10% of a partner's beginning capital investments.The remaining income or loss is to be divided equally.If the net income for the current year is $135,000,then Shelby and Mortonson's respective shares are:

Jane,Castle,and Sean are partners who share income and loss in a 4: 2: 2 ratio.The partnership's capital balances are as follows: Jane,$292,000; Castle,$114,000; and Sean,$194,000.Conner is admitted to the partnership on March 1 with a 25% equity.Prepare the journal entries to record Conner's entry into the partnership under each of the following separate assumptions: Conner invests (a)$200,000; (b)$180,000; and (c)$240,000.

Jane,Castle,and Sean are dissolving their partnership.Their partnership agreement allocates each partner an equal share of all income and losses.The current period's ending capital account balances are Jane,$54,000; Castle,$42,000; and Sean,$(6,000).After all assets are sold and liabilities are paid,there is $90,000 in cash to be distributed.Sean is unable to pay the deficiency.The journal entry to record the distribution should be:

Partners in a partnership are taxed on ___________________,not on their withdrawals.

The following information is available on Stewart Enterprises,a partnership,for the most recent fiscal year: Total partnership capital at beginning of the year $180,000 Partnership net income for the year $150,000 Withdrawals by partners during the year $120,000 Additional investments by partners during the year $ 60,000 There are three partners in Stewart Enterprises: Stewart,Tedder and Armstrong.At the end of the year,the partners' capital accounts were in the ratio of 2: 1: 2,respectively.Compute the ending capital balances of the three partners.

If a partner withdraws from a partnership and the recorded value of his or her equity is overstated,then a bonus goes to ________________; if the recorded value of the withdrawing partner's equity is understated,then a bonus goes to ____________________.

Assume that the S & B partnership agreement gave Steely 60% and Breck 40% of partnership income and losses.The partnership lost $27,000 in the current period.This implies that Steely's share of the loss equals $16,200,and Breck's share equals $10,800.

Partners in a partnership are taxed on the amounts they withdraw from the partnership,not the partnership income.

Mutual agency means

When a partnership is liquidated,its business is ended.

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.

__________________ means that partners can commit or bind the partnership to any contract within the scope of the partnership business.