Question 1

Which of the following statements best describes accounting for a partnership?

Accepted Answer

A)  A partnership may be a profit or a nonprofit entity. 
B)  A partnership may use federal income tax rules to account for transactions in their journals and ledger accounts. 
C)  A partnership's equity section contains both capital and retained earnings accounts. 
D)  A partnership may only distribute money through a dividend payment. 
A)  A partnership may be a profit or a nonprofit entity. 
B)  A partnership may use federal income tax rules to account for transactions in their journals and ledger accounts. 
C)  A partnership's equity section contains both capital and retained earnings accounts. 
D)  A partnership may only distribute money through a dividend payment. B

Question 2

In the RST partnership, Ron's capital is $80,000, Stella's is $75,000, and Tiffany's is $50,000. They share income in a 3:2:1 ratio, respectively. Tiffany is retiring from the partnership. Each of the following questions is independent of the others.
-Refer to the above information.Tiffany is paid $60,000,and no goodwill is recorded.In the journal entry to record Tiffany's withdrawal:

Accepted Answer

A)  Tiffany, Capital will be credited for $60,000. 
B)  Ron, Capital will be debited for $5,000. 
C)  Stella, Capital will be debited for $4,000. 
D)  Cash will be debited for $60,000. 
A)  Tiffany, Capital will be credited for $60,000. 
B)  Ron, Capital will be debited for $5,000. 
C)  Stella, Capital will be debited for $4,000. 
D)  Cash will be debited for $60,000. C

Question 3

Net income for Levin-Tom partnership for 2009 was $125,000.Levin and Tom have agreed to distribute partnership net income according to the following plan:
Additional Information for 2009 follows:
1.Levin began the year with a capital balance of $75,000.
2.Tom began the year with a capital balance of $100,000.
3.On March 1,Levin invested an additional $25,000 into the partnership.
4.On October 1,Tom invested an additional $20,000 into the partnership.
5.Throughout 2009,each partner withdrew $200 per week in anticipation of partnership net income.The partners agreed that these withdrawals are not to be included in the computation of average capital balances for purposes of income distributions.
Required:
a.Prepare a schedule that discloses the distribution of partnership net income for 2009.Show supporting computations in good form.
b.Prepare the statement of partners' capital at December 31,2009.
c.How would your answer to part a change if all of the provisions of the income distribution plan were the same except that the salaries were $45,000 to Levin and $60,000 to Jack?
   
Problem 73 (continued):

Accepted Answer

a)
       Problem 73 (continued):

Question 4

In the JK partnership, Jacob's capital is $140,000, and Katy's is $40,000. They share income in a 3:2 ratio, respectively. They decide to admit Erin to the partnership. Each of the following questions is independent of the others.
-Refer to the information provide above.Erin invests $50,000 for a one-fifth interest in the total capital of $230,000.What are the capital balances of Jacob and Katy after Erin is admitted into the partnership?

Accepted Answer

The answer of In the JK partnership, Jacob's capital is...

Question 5

In the LMN partnership, Lynn's capital is $60,000, Marty's is $80,000, and Nancy's is $70,000. They share income in a 4:3:3 ratio, respectively. Nancy is retiring from the partnership. Each of the following questions is independent of the others.
-Refer to the above information.Nancy is paid $76,000,and all implied goodwill is recorded.What is the total amount of goodwill recorded?

Accepted Answer

A)  $20,000 
B)  $14,000 
C)  $6,000 
D)  $0 
A)  $20,000 
B)  $14,000 
C)  $6,000 
D)  $0

Question 6

In the AD partnership, Allen's capital is $140,000 and Daniel's is $40,000 and they share income in a 3:1 ratio, respectively. They decide to admit David to the partnership. Each of the following questions is independent of the others.
-Refer to the information provided above.David invests $50,000 for a one-fifth interest.What amount of goodwill will be recorded?

Accepted Answer

A)  $20,000 
B)  $4,000 
C)  $40,000 
D)  $15,000 
A)  $20,000 
B)  $4,000 
C)  $40,000 
D)  $15,000

Question 7

In the JK partnership, Jacob's capital is $140,000, and Katy's is $40,000. They share income in a 3:2 ratio, respectively. They decide to admit Erin to the partnership. Each of the following questions is independent of the others.
-Refer to the information provided above.Assume that Erin invests $40,000 for a one-fifth interest.Goodwill is to be recorded.The journal entry to record Erin's admission into the partnership will include

Accepted Answer

A)  a credit to cash for $40,000 
B)  a credit to Erin, Capital for $45,000 
C)  a credit to Erin, Capital for $40,000 
D)  a debit to goodwill for $4,000 
A)  a credit to cash for $40,000 
B)  a credit to Erin, Capital for $45,000 
C)  a credit to Erin, Capital for $40,000 
D)  a debit to goodwill for $4,000

Question 8

When a new partner is admitted into a partnership and the new partner receives a capital credit greater than the tangible assets contributed,which of the following explains the difference?
I.The old partners' goodwill is being recognized.
II.The new partner's goodwill is being recognized.

Accepted Answer

A)  I only 
B)  II only 
C)  Either I or II 
D)  Both I and II 
A)  I only 
B)  II only 
C)  Either I or II 
D)  Both I and II

Question 9

A limited liability company (LLC):
I.is governed by the laws of the state in which it is formed.
II.provides liability protection to its investors.
III.does not offer pass-through taxation benefits of partnerships.

Accepted Answer

A)  Both I and III. 
B)  III 
C)  Both I and II 
D)  I, II, and II 
A)  Both I and III. 
B)  III 
C)  Both I and II 
D)  I, II, and II

Question 10

RD formed a partnership on February 10,20X9.R contributed cash of $150,000,while D contributed inventory with a fair value of $120,000.Due to R's expertise in selling,D agreed that R should have 60 percent of the total capital of the partnership.R and D agreed to recognize goodwill.What is the total capital of the RD partnership and the capital balance of R after the goodwill is recognized?

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Question 11

When a new partner is admitted into a partnership and the old partners' goodwill is recognized,the goodwill is allocated to:
I.all the partners in their profit-and-loss-sharing ratio.
II.the old partners in their profit and loss sharing ratio.

Accepted Answer

A)  I only 
B)  II only 
C)  Either I or II 
D)  Neither I nor II 
A)  I only 
B)  II only 
C)  Either I or II 
D)  Neither I nor II

Question 12

In the JK partnership, Jacob's capital is $140,000, and Katy's is $40,000. They share income in a 3:2 ratio, respectively. They decide to admit Erin to the partnership. Each of the following questions is independent of the others.
-Refer to the information provided above.Erin invests $52,000 for a one-fifth interest.What amount of goodwill will be recorded?

Accepted Answer

A)  $7,000 
B)  $28,000 
C)  $50,000 
D)  $80,000 
A)  $7,000 
B)  $28,000 
C)  $50,000 
D)  $80,000

Question 13

Which of the following accounts could be found in the PQ partnership's general ledger?
I.Due from P
II.P,Drawing
III.Loan Payable to Q

Accepted Answer

A)  I, II 
B)  I, III 
C)  II, III 
D)  I, II, and III 
A)  I, II 
B)  I, III 
C)  II, III 
D)  I, II, and III

Question 14

A partner's tax basis in a partnership is comprised of which of the following items?
I.The partner's tax basis of assets contributed to the partnership.
II.The amount of the partner's liabilities assumed by the other partners.
III.The partner's share of other partners' liabilities assumed by the partnership.

Accepted Answer

A)  I plus II minus III 
B)  I plus II plus III 
C)  I minus II plus III 
D)  I minus II minus III 
A)  I plus II minus III 
B)  I plus II plus III 
C)  I minus II plus III 
D)  I minus II minus III

Question 15

In the JK partnership, Jacob's capital is $140,000, and Katy's is $40,000. They share income in a 3:2 ratio, respectively. They decide to admit Erin to the partnership. Each of the following questions is independent of the others.
-Refer to the information provided above.Jacob and Katy agree that some of the inventory is obsolete.The inventory account is decreased before Erin is admitted.Erin invests $38,000 for a one-fifth interest.What is the amount of inventory written down?

Accepted Answer

A)  $10,000 
B)  $20,000 
C)  $28,000 
D)  $36,000 
A)  $10,000 
B)  $20,000 
C)  $28,000 
D)  $36,000

Question 16

A partnership is a(n):
I.accounting entity.
II.taxable entity.

Accepted Answer

A)  I only 
B)  II only 
C)  Neither I nor II 
D)  Both I and II 
A)  I only 
B)  II only 
C)  Neither I nor II 
D)  Both I and II

Question 17

If A is the total capital of a partnership before the admission of a new partner, B is the total capital of the partnership after the admission of the new partner, C is the amount of the new partner's investment, and D is the amount of capital credited to the new partner, then there is:

Accepted Answer

A)  goodwill to the new partner if B > (A + 
C)  and D  C. 
C)  a bonus to the new partner if B = A + C and D > C. 
D)  neither bonus nor goodwill if B > (A + 
C)  and D > C. 
A)  goodwill to the new partner if B > (A + 
C)  and D  C. 
C)  a bonus to the new partner if B = A + C and D > C. 
D)  neither bonus nor goodwill if B > (A + 
C)  and D > C.

Question 18

In the RST partnership, Ron's capital is $80,000, Stella's is $75,000, and Tiffany's is $50,000. They share income in a 3:2:1 ratio, respectively. Tiffany is retiring from the partnership. Each of the following questions is independent of the others.
-Refer to the above information.Tiffany is paid $60,000,and no goodwill is recorded.What is the Ron's capital balance after Tiffany withdraws from the partnership?

Accepted Answer

A)  $74,000 
B)  $71,000 
C)  $75,000 
D)  $86,000 
A)  $74,000 
B)  $71,000 
C)  $75,000 
D)  $86,000

Question 19

In the LMN partnership, Lynn's capital is $60,000, Marty's is $80,000, and Nancy's is $70,000. They share income in a 4:3:3 ratio, respectively. Nancy is retiring from the partnership. Each of the following questions is independent of the others.
-Refer to the information above.Nancy is paid $84,000,and no goodwill is recorded.In the journal entry to record Nancy's withdrawal

Accepted Answer

A)  Lynn, Capital will be debited for $7,000 
B)  Marty, Capital will be debited for $6,000 
C)  Nancy, Capital will be credited for $70,000 
D)  Cash will be debited for $84,000 
A)  Lynn, Capital will be debited for $7,000 
B)  Marty, Capital will be debited for $6,000 
C)  Nancy, Capital will be credited for $70,000 
D)  Cash will be debited for $84,000

Question 20

In the AD partnership, Allen's capital is $140,000 and Daniel's is $40,000 and they share income in a 3:1 ratio, respectively. They decide to admit David to the partnership. Each of the following questions is independent of the others.
-Refer to the information provided above.David invests $40,000 for a one-fifth interest in the total capital of $220,000.The journal to record David's admission into the partnership will include:

Accepted Answer

A)  a credit to Cash for $40,000. 
B)  a debit to Allen, Capital for $3,000. 
C)  a credit to David, Capital for $40,000. 
D)  a credit to Daniel, Capital for $1,000. 
A)  a credit to Cash for $40,000. 
B)  a debit to Allen, Capital for $3,000. 
C)  a credit to David, Capital for $40,000. 
D)  a credit to Daniel, Capital for $1,000.

Which of the following statements best describes accounting for a partnership?

When a new partner is admitted into a partnership and the new partner receives a capital credit greater than the tangible assets contributed,which of the following explains the difference? I.The old partners' goodwill is being recognized. II.The new partner's goodwill is being recognized.

A limited liability company (LLC): I.is governed by the laws of the state in which it is formed. II.provides liability protection to its investors. III.does not offer pass-through taxation benefits of partnerships.

When a new partner is admitted into a partnership and the old partners' goodwill is recognized,the goodwill is allocated to: I.all the partners in their profit-and-loss-sharing ratio. II.the old partners in their profit and loss sharing ratio.

Which of the following accounts could be found in the PQ partnership's general ledger? I.Due from P II.P,Drawing III.Loan Payable to Q

A partnership is a(n): I.accounting entity. II.taxable entity.

If A is the total capital of a partnership before the admission of a new partner, B is the total capital of the partnership after the admission of the new partner, C is the amount of the new partner's investment, and D is the amount of capital credited to the new partner, then there is:

Intercorporate Acquisitions and Investments in Other Entities

Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries With No Differential

The Reporting Entity and Consolidation of Less-Than-Wholly-Owned Subsidiaries With No Differentials

Consolidation of Wholly Owned Subsidiaries Acquired at More Than Book Value

Consolidation of Less-Than-Wholly-Owned Subsidiaries Acquired at More Than Book Value

Intercompany Inventory Transactions

Intercompany Transfers of Services and Noncurrent Assets

Intercompany Indebtedness

Appendix A: Intercompany Indebtedness

Consolidation Ownership Issues

Additional Consolidation Reporting Issues

Multinational Accounting: Foreign Currency Transactions and Financial Instruments

Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity Statements

Segment and Interim Reporting

Sec Reporting

Partnerships: Liquidation

Governmental Entities: Introduction and General Fund Accounting

Governmental Entities: Special Funds and Government-Wide Financial Statements

Not-For-Profit Entities

Corporations in Financial Difficulty

Filters

Exam 15: Partnerships: Formation,operation,and Changes in Membership

Which of the following statements best describes accounting for a partnership?

When a new partner is admitted into a partnership and the new partner receives a capital credit greater than the tangible assets contributed,which of the following explains the difference? I.The old partners' goodwill is being recognized. II.The new partner's goodwill is being recognized.

A limited liability company (LLC): I.is governed by the laws of the state in which it is formed. II.provides liability protection to its investors. III.does not offer pass-through taxation benefits of partnerships.

When a new partner is admitted into a partnership and the old partners' goodwill is recognized,the goodwill is allocated to: I.all the partners in their profit-and-loss-sharing ratio. II.the old partners in their profit and loss sharing ratio.

Which of the following accounts could be found in the PQ partnership's general ledger? I.Due from P II.P,Drawing III.Loan Payable to Q

A partnership is a(n): I.accounting entity. II.taxable entity.

If A is the total capital of a partnership before the admission of a new partner, B is the total capital of the partnership after the admission of the new partner, C is the amount of the new partner's investment, and D is the amount of capital credited to the new partner, then there is:

Intercorporate Acquisitions and Investments in Other Entities

Reporting Intercorporate Investments and Consolidation of Wholly Owned Subsidiaries With No Differential

The Reporting Entity and Consolidation of Less-Than-Wholly-Owned Subsidiaries With No Differentials

Consolidation of Wholly Owned Subsidiaries Acquired at More Than Book Value

Consolidation of Less-Than-Wholly-Owned Subsidiaries Acquired at More Than Book Value

Intercompany Inventory Transactions

Intercompany Transfers of Services and Noncurrent Assets

Intercompany Indebtedness

Appendix A: Intercompany Indebtedness

Consolidation Ownership Issues

Additional Consolidation Reporting Issues

Multinational Accounting: Foreign Currency Transactions and Financial Instruments

Multinational Accounting: Issues in Financial Reporting and Translation of Foreign Entity Statements

Segment and Interim Reporting

Sec Reporting

Partnerships: Liquidation

Governmental Entities: Introduction and General Fund Accounting

Governmental Entities: Special Funds and Government-Wide Financial Statements

Not-For-Profit Entities

Corporations in Financial Difficulty

Filters