Exam 16: Accounting for Partnerships

The BlueFin Partnership agreed to dissolve.The remaining cash balance after liquidating partnership assets and liabilities is $60,000.The final capital account balances are: Smith, $30,000; Nagy, $20,000; and Russ, $10,000.Prepare the journal entry to distribute the remaining cash to the partners.

Free

(Essay)

4.8/5

(30)

Question 1

Correct Answer:

Verified

What are the ways that a new partner can be admitted to an existing partnership? Explain how to account for the admission of the new partner under each of these circumstances.

Free

(Essay)

4.9/5

(35)

Question 2

Correct Answer:

Verified

A new partner may purchase a partnership interest from one or more existing partners.In this case, a capital account is established for the new partner equal to the portion of the existing partners' interest that was purchased from that partner or partners.This transaction is a personal transaction between one or more current partners and the new partner.A new partner may invest assets in the existing partnership.This is a transaction between the new partner and the partnership.In this case, a capital account is established for the new partner equal to the portion of the partnership purchased.When the current value of a partnership is greater than the recorded amounts of equity, the partners usually require the new partner to pay a bonus for the privilege of joining.When the partnership needs additional cash or the new partner has exceptional talents, the existing partners may grant a bonus to the new partner.

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from the acts of other partners is a ____________________________ partnership.

Free

(Short Answer)

4.9/5

(40)

Question 3

Correct Answer:

Verified

limited liability

Beard, Tanner, Williams are operating as a partnership.The capital account balances at December 31, 2013 are $254,000, $195,000 and $286,000 respectively.Record the entries for the following independent situations. a.The partners vote to admit Sturges.She is going to invest $150,000 for a 15% interest in the partnership.Profit and losses are split equally between the existing partners. b.Sturges agrees to buy 50% of Williams interest by paying him $150,000 directly. c.The partners need new ideas and agree to give Sturges a 20% interest in exchange for $150,000.Profits and losses are shared equally between the existing partners. d.Williams wants to retire and is willing to leave the partnership in exchange for $281,000.Profits and losses were shared on the ratio of 2:3:5.

(Essay)

4.8/5

(41)

Question 4

Partners' withdrawals are credited to their separate withdrawals accounts.

(True/False)

4.8/5

(39)

Question 5

Partnership accounting:

(Multiple Choice)

4.9/5

(38)

Question 6

In the absence of a partnership agreement, the law says that income and loss should be allocated based on:

(Multiple Choice)

4.8/5

(39)

Question 7

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 $125,000, then Shelby and Mortonson's respective shares are:

(Multiple Choice)

4.9/5

(40)

Question 8

Durango and Verde formed a partnership with capital contributions of $150,000 and $190,000, respectively.Their partnership agreement called for Durango to receive a $50,000 annual salary allowance.They also agreed to allow each partner a share of income equal to 10% of their initial capital investments.The remaining income or loss is to be divided equally.If the net income for the current year is $120,000, what are Durango's and Verde's respective shares?

(Essay)

4.8/5

(39)

Question 9

Conley and Liu allow Lepley to purchase a 25% interest in their partnership for $50,000 cash.Conley and Liu both have capital balances of $55,000 each and have agreed to share income and loss equally.Prepare the journal entry to record the admission of Lepley to the partnership.

(Essay)

4.7/5

(32)

Question 10

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

(Short Answer)

4.9/5

(38)

Question 11

Nguyen invested $100,000 and Hansen invested $200,000 in a partnership.They agreed to share income and loss by allowing a $60,000 per year salary allowance to Nguyen and a $40,000 per year salary allowance to Hansen, plus an interest allowance on the partners' beginning-year capital investments at 10%, with the balance to be shared equally.Under this agreement, the shares of the partners when the partnership earns a $105,000 in income are: A.$52,500 to Nguyen; $52,500 to Hansen. B.$35,000 to Nguyen; $70,000 to Hansen. C.$57,500 to Nguyen; $47,500 to Hansen. D.$42,500 to Nguyen; $62,500 to Hansen. E.$70,000 to Nguyen; $60,000 to Hansen.

(Essay)

4.8/5

(36)

Question 12

When a partnership is liquidated, its business is ended.

(True/False)

4.9/5

(35)

Question 13

Juanita invested $100,000 and Jacque invested $95,000 in a new partnership.They agreed to a $50,000 annual salary allowance to Juanita and a $40,000 annual salary allowance to Jacque.They also agreed to an annual interest allowance of 10% on the partners' beginning-year capital balance, with the balance to be divided equally.Under this agreement, what are the income or loss shares of the partners if the annual partnership income is $102,000?

(Essay)

4.9/5

(31)

Question 14

The statement of partners' equity shows the beginning balance in retained earnings, plus investments, less withdrawals, the income or loss, and the ending balance in retained earnings.

(True/False)

4.9/5

(35)

Question 15

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:

(Multiple Choice)

4.9/5

(33)

Question 16

Which of the following best lists the disadvantages of a partnership:

(Multiple Choice)

4.8/5

(40)

Question 17

Armstrong plans to leave the FAP Partnership.The recorded value of her capital account is $48,000.The remaining partners, Floyd and Peters, agree to pay Armstrong $40,000 cash.The partners have agreed to share income and loss equally.Prepare the general journal entry to record the withdrawal from the partnership.

(Essay)

4.8/5

(38)

Question 18

S.Reising contributed $48,000 in cash plus equipment valued at $73,000 to the Reising Construction Partnership.The journal entry to record the transaction for the partnership is:

(Multiple Choice)

4.8/5

(32)

Question 19

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:

(Multiple Choice)

4.8/5

(37)

Question 20

Showing 1 - 20 of 126

The BlueFin Partnership agreed to dissolve.The remaining cash balance after liquidating partnership assets and liabilities is $60,000.The final capital account balances are: Smith, $30,000; Nagy, $20,000; and Russ, $10,000.Prepare the journal entry to distribute the remaining cash to the partners.

What are the ways that a new partner can be admitted to an existing partnership? Explain how to account for the admission of the new partner under each of these circumstances.

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from the acts of other partners is a ____________________________ partnership.

Partners' withdrawals are credited to their separate withdrawals accounts.

Partnership accounting:

In the absence of a partnership agreement, the law says that income and loss should be allocated based on:

Conley and Liu allow Lepley to purchase a 25% interest in their partnership for $50,000 cash.Conley and Liu both have capital balances of $55,000 each and have agreed to share income and loss equally.Prepare the journal entry to record the admission of Lepley to the partnership.

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

When a partnership is liquidated, its business is ended.

The statement of partners' equity shows the beginning balance in retained earnings, plus investments, less withdrawals, the income or loss, and the ending balance in retained earnings.

Which of the following best lists the disadvantages of a partnership:

S.Reising contributed $48,000 in cash plus equipment valued at $73,000 to the Reising Construction Partnership.The journal entry to record the transaction for the partnership is:

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:

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Time Value of Money

Basic Accounting for Transactions

Filters

Exam 16: Accounting for Partnerships

The BlueFin Partnership agreed to dissolve.The remaining cash balance after liquidating partnership assets and liabilities is $60,000.The final capital account balances are: Smith, $30,000; Nagy, $20,000; and Russ, $10,000.Prepare the journal entry to distribute the remaining cash to the partners.

What are the ways that a new partner can be admitted to an existing partnership? Explain how to account for the admission of the new partner under each of these circumstances.

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from the acts of other partners is a ____________________________ partnership.

Partners' withdrawals are credited to their separate withdrawals accounts.

Partnership accounting:

In the absence of a partnership agreement, the law says that income and loss should be allocated based on:

Conley and Liu allow Lepley to purchase a 25% interest in their partnership for $50,000 cash.Conley and Liu both have capital balances of $55,000 each and have agreed to share income and loss equally.Prepare the journal entry to record the admission of Lepley to the partnership.

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

When a partnership is liquidated, its business is ended.

The statement of partners' equity shows the beginning balance in retained earnings, plus investments, less withdrawals, the income or loss, and the ending balance in retained earnings.

Which of the following best lists the disadvantages of a partnership:

S.Reising contributed $48,000 in cash plus equipment valued at $73,000 to the Reising Construction Partnership.The journal entry to record the transaction for the partnership is:

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:

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Performance Reporting

Master Budgets and Performance Planning

Flexible Budgets and Standard Costing

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Time Value of Money

Basic Accounting for Transactions

Filters

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