Exam 28: Accounting for Partnerships

Blaser,Lukins,and Franko formed a partnership with Blaser contributing $160,000,Lukins contributing $520,000,and Franko contributing $240,000.Their partnership agreement called for the income (loss)division to be based on the ratio of capital investments.If the partnership had income of $275,000 for its first year of operation,what amount of income (rounded to the nearest dollar)would be credited to Franko's capital account?

___________________________ means that partners can commit or bind the partnership to any contract within the scope of the partnership business.

During 2013,Schmidt invested $75,000 and Baldwin invested $90,000 in a partnership.They agreed that Baldwin would get a salary allowance of $30,000 and they would share any remaining income or loss equally.During 2013 the partnership earned net income of $300,000 and they each withdrew $12,000 from the partnership.Which of the following statements is correct?

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.

Explain the steps involved in the liquidation of a partnership.

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:

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 partnership agreement:

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:

Tanner,Schmidt,and Hayes are partners with capital account balances of $100,000,$120,000,and $96,000 respectively.They share profits and losses in a 3:4:3 ratio.Schmidt wishes to leave the partnership and will be paid $125,000.What are the remaining capital account balances after Schmidt withdraws?

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:

A partnership cannot use salary allowances or interest allowances if it uses the stated ratio method to allocate income and losses to the partners.

Partner return on equity is calculated as ______________________________.

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

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.

Partnership accounting:

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

During 2013,Carpenter invested $75,000 and DiAngelo invested $90,000 in a partnership.They agreed to share income and loss by allowing a $40,000 per year salary allowance to Carpenter and a $42,000 per year salary allowance to DiAngelo,plus an interest allowance on the partners' beginning-year capital investments at 8%,with the balance to be shared equally.Under this agreement,if the partnership earns net income of $300,000 during 2013 the income allocated to each partner is:

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:

When a partner is added to a partnership: