Exam 16: Accounting for Partnerships

Collins and Farina are forming a partnership.Collins is investing a building that has a market value of $80,000.However, the building carries a $56,000 mortgage that will be assumed by the partnership.Farina is investing $20,000 cash.The balance of Collins' Capital account will be:

The BlueFin Partnership agrees to dissolve.The cash balance after selling all assets and paying all liabilities is $60,000.The final capital account balances are: Smith, $35,000; Nagy, $29,000; and Russ, ($4,000).Russ is unable to pay the capital deficiency.Prepare the journal entries to record the transactions required to dissolve this partnership.

In the absence of a partnership agreement, the law says that income of a partnership will be shared equally by the partners.

Baldwin and Tanner formed a partnership.Baldwin's initial capital account balance was $125,000 and Tanner's was $105,000.They agreed to share income and loss as follows: Baldwin 40%, Tanner 60%.Income was $102,000 in year 1 and $150,000 in year 2.Assume they each withdrew $10,000 per year.Calculate the capital balances for Baldwin and Tanner at the end of year 2.

Admitting a partner into a partnership by accepting assets is a personal transaction between one or more current partners and the new partner.

Collins and Farina are forming a partnership.Collins is investing a building that has a market value of $80,000 and a book value of $65,000.However, the building carries a $56,000 mortgage that will be assumed by the partnership.Farina is investing $20,000 cash.Total capital in the partnership will be:

When a partnership is liquidated, which of the following is not true?

McCartney, Harris, and Hussin are dissolving their partnership.Their partnership agreement allocates each partner 1/3 of all income and losses.The current period's ending capital account balances are McCartney, $13,000; Harris, $13,000; and Hussin, $(2,000).After all assets are sold and liabilities are paid, there is $24,000 in cash to be distributed.Hussin is unable to pay the deficiency.The journal entry to record the distribution should be: A. B. C. D. E.

What are the ways a partner can withdraw from a partnership? Explain how to account for the withdrawal of a current partner from a partnership.

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

Khalid, Dina, and James are partners with beginning-year capital balances of $400,000, $320,000, and $160,000, respectively.The partners agreed to share income and loss as follows: salary of $30,000 to Khalid; $50,000 to Dina; and $55,000 to James and an interest allowance of 10% on beginning-of-year capital balances.Any remaining balance is to be divided equally.If partnership net income for the year is $190,000, determine each partner's share and make the appropriate journal entry to close the Income Summary to the capital accounts.

If partners devote their time and services to their partnership, their salaries are expenses on the income statement.

Identify and discuss the key characteristics of partnerships.Also, identify nonpartnership organizations that possess the positive aspects of both partnerships and corporations.

Explain the steps involved in the liquidation of a partnership.

A partner can be admitted into a partnership by ________________________ or by ______________________________.

A partnership recorded the following journal entry: This entry reflects:

A partnership that has at least two classes of partners, general and limited, that allows the limited partners to have no personal liability beyond the amounts they invest in the partnership, and in which the limited partners have no active role except as specified in the partnership agreement is a ________________________ partnership.

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 25% interest.Block will invest $35,000 in the partnership.The bonus that is granted to Block equals:

How are partners' investments in a partnership recorded?

Mutual agency means each partner can commit or bind the partnership to any contract within the scope of the partnership business.