Exam 17: Partnership

The statement of partners' equity reflects the equity of each partner and summarizes the allocation of net income for the year.

Given the following accounts: [1] Cash [2] Accounts receivable [3] Allowance for doubtful accounts [4] Merchandise inventory [5] Store supplies [6] Store equipment [7] Accumulated depreciation [8] Notes payable [9] Accounts payable [10] Able Partner's Capital [11] Baker Partner's Capital [12] Able Partner's withdrawals [13] Baker Partner's withdrawals [14] Income summary [15] Service revenue [16] Gain on realization [17] Loss on realization Indicate the account(s) to be debited and credited to record the following transactions. -Able accepted Baker into the partnership with an investment of cash,inventory,and store equipment,including accumulated depreciation. Debit ________ & ________ & ________ Credit ________ & ________ & ________

Which of the following is an incorrect step in the process of partnership liquidation?

When a partnership is terminated,the assets are turned into cash and obligations are paid.This process is called:

Which of the following is true of a partnership?

Discuss (a)the purpose of the articles of partnership,and (b)indicate the items that should be included.

Janie and Larry are partners,with beginning capital balances of $60,000 and $40,000 respectively.During the year,Janie withdrew $10,000 and Larry withdrew $15,000.The year's net income of $30,000 was distributed $10,000 to Janie and $20,000 to Larry.Prepare a statement of Partners' equity.

Given the following accounts: [1] Cash [2] Accounts receivable [3] Allowance for doubtful accounts [4] Merchandise inventory [5] Store supplies [6] Store equipment [7] Accumulated depreciation [8] Notes payable [9] Accounts payable [10] Able Partner's Capital [11] Baker Partner's Capital [12] Able Partner's withdrawals [13] Baker Partner's withdrawals [14] Income summary [15] Service revenue [16] Gain on realization [17] Loss on realization Indicate the account(s) to be debited and credited to record the following transactions. -Closed the income summary,there is a net loss. Debit ________ & ________ & ________ Credit ________ & ________ & ________

The first step take in liquidating a partnership is to:

An interest allowance is based on the beginning capital balance of each partner.

Partners Eric and Jeremy each have $3,000 capital balances and share income and losses in a 2:1 ratio,respectively.Cash equals $1,000,noncash assets are $10,000,and liabilities are $5,000.If all the noncash assets are sold for $4,000,and each partner is personally insolvent,Jeremy eventually will receive cash of:

Partner A invested furniture that was recorded at a value below the fair market value.This error would cause:

The journal entry to close a net income to the partners is to:

Given the following accounts: [1] Cash [2] Accounts receivable [3] Allowance for doubtful accounts [4] Merchandise inventory [5] Store supplies [6] Store equipment [7] Accumulated depreciation [8] Notes payable [9] Accounts payable [10] Able Partner's Capital [11] Baker Partner's Capital [12] Able Partner's withdrawals [13] Baker Partner's withdrawals [14] Income summary [15] Service revenue [16] Gain on realization [17] Loss on realization Indicate the account(s) to be debited and credited to record the following transactions. -During liquidation realized more than book value for the merchandise inventory. Debit ________ & ________ & ________ Credit ________ & ________ & ________

Which of the following is not generally written into the articles of partnership agreement?

Before calculating salary and interest allowances,it is necessary to determine whether net income will cover these expenses.

Nathan Long is entering into a partnership with Terri.Nathan is investing $2,000 cash and equipment currently on Nathan's books at $6,000 and accumulated depreciation of $1,000.The equipment has a fair market value of $4,000.The entry to record Nathan's investment should include be to:

Bill pays Steve $9,000 for his $7,000 interest in a partnership.On the partnership books:

Applying the interest allowance method,compute Julie and Jennifer's share of net income if Julie invested $40,000 and Jennifer invested $24,000 at an 8% interest rate,with the remainder to be divided equally.Net income was $10,000.

Unlimited liability means that the act of a single partner is binding on all the other partners.