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

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 $50,000 for a one-fifth interest in the total capital of $230,000.The journal entry to record Erin's admission into the partnership would include

The JPB partnership reported net income of $160,000 for the year ended December 31,20X8.According to the partnership agreement,partnership profits and losses are to be distributed as follows: How should partnership net income for 20X8 be allocated to J,P,and B?

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

Roberts and Smith drafted a partnership agreement that lists the following assets contributed at the partnership's formation: The building is subject to a mortgage of $10,000,which the partnership has assumed.The partnership agreement also specifies that profits and losses are to be distributed evenly.What amounts should be recorded as capital for Roberts and Smith at the formation of the partnership?

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.What amount will David have to invest to give him one-fifth percent interest in the capital of the partnership if no goodwill or bonus is recorded?

The PQ partnership has the following plan for the distribution of partnership net income (loss): Required: Calculate the distribution of partnership net income (loss)for each independent situation below (for each situation,assume the average capital balance of P is $140,000 and of Q is $240,000). 1.Partnership net income is $360,000. 2.Partnership net income is $240,000. 3.Partnership net loss is $40,000. Problem 74 (continued):

The terms of a partnership agreement provide that one of the partners is to receive a salary allowance of $20,000 plus a bonus of 10 percent of income after deduction of the bonus and the salary allowance.If income is $130,000,the bonus should be

When a new partner is admitted into a partnership and the capital of the old partners decreases,which of the following explains the reason for the decrease? I.Undervalued liabilities were written up to their fair values. II.Undervalued assets were written up to their fair values.

Which of the following accounts could be found in the general ledger of a partnership?

Shue,a partner in the Financial Brokers Partnership,has a 30 percent share in partnership profits and losses.Shue's capital account had a net decrease of $100,000 during 20X8.During 20X8,Shue withdrew $240,000 as withdrawals and contributed equipment valued at $50,000 to the partnership.What was the net income of the Financial Brokers Partnership for 20X8?

-Refer to the above information.Which statement below is correct if goodwill of the old partners is recognized upon the contribution of assets into the partnership by a new partner?

The APB partnership agreement specifies that partnership net income be allocated as follows: Average capital balances for the current year were $50,000 for A, $30,000 for P, and $20,000 for B. -Refer to the information given.Assuming a current year net income of $150,000,what amount should be allocated to each partner?

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.Allen and Daniel agree that some of the inventory is obsolete.The inventory account is decreased before David is admitted.David invests $40,000 for a one-fifth interest.What is the amount of inventory written down?

James Dixon,a partner in an accounting firm,decided to withdraw from the partnership.Dixon's share of the partnership profits and losses was 20%.Upon withdrawing from the partnership he was paid $74,000 in final settlement for his interest.The total of the partners' capital accounts before recognition of partnership goodwill prior to Dixon's withdrawal was $210,000.After his withdrawal the remaining partners' capital accounts,excluding their share of goodwill,totaled $160,000.The total agreed upon goodwill of the firm was

-Refer to the above information.Which statement below is correct if a new partner purchases an interest in capital directly from the old partners?

Griffin and Rhodes formed a partnership on January 1,20X9.Griffin contributed cash of $120,000 and Rhodes contributed land with a fair value of $160,000.The partnership assumed the mortgage on the land which amounted to $40,000 on January 1.Rhodes originally paid $90,000 for the land.On July 31,20X9,the partnership sold the land for $190,000.Assuming Griffin and Rhodes share profits and losses equally,how much of the gain from sale of land should be credited to Griffin for financial accounting purposes?

Fox,Greg,and Howe are partners with average capital balances during 20X1 of $120,000,$60,000,and $40,000,respectively.Partners receive 10% interest on their average capital balances.After deducting salaries of $30,000 to Fox and $20,000 to Howe,the residual profit or loss is divided equally.In 20X1 the partnership sustained a $33,000 loss before interest and salaries to partners.By what amount should Fox's capital account change?

When a partner retires from a partnership and the retiring partner is paid more than the capital balance in her account,which of the following explains the difference? I.The retiring partner is receiving a bonus from the other partners. II.The retiring partner's goodwill is being recognized.

The SRT partnership agreement specifies that partnership net income be allocated as follows: Average capital balances for the current year were $60,000 for S, $50,000 for R, and $40,000 for T. -Refer to the information given.Assuming a current year net income of $125,000,what amount should be allocated to each partner?

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 $56,000,and all implied goodwill is recorded.What is the total amount of goodwill recorded?