Exam 27: Accounting for Unincorporated Businesses

A partner invests into a partnership a building with a $50,000 carrying value and $80,000 fair market value.The related mortgage payable of $25,000 is not assumed by the partnership.The entry to record the investment in partnership is:

When a withdrawing partner withdraws assets less than his or her capital balance,the excess is treated as a bonus to the remaining partners.

A partnership is relatively easy to form,but is very complex to dissolve.

Which of the following statements is correct regarding partnerships?

April and Cammy are partners who have agreed to admit Elena,who will invest $30,000 for a 20 percent interest.The previous capital balances were $30,000 and $60,000 for April and Cammy,respectively.April and Cammy had shared profits equally.The entry that records Elena's admission to the partnership is:

When a partner withdraws from a partnership taking assets that represent less than his or her capital balance,

Each partner has a separate Capital,Withdrawals,and Income account.

Partner A purchases Partner B's $3,000 interest from Partner B for $5,000.The entry to record the transaction is for $3,000.

One of the benefits of forming a partnership is limited liability.

When M purchases N's $10,000 capital interest for $10,000,the ensuing entry on the books of the partnership would contain a debit to Cash for $10,000.

April and Cammy are partners who have agreed to admit Elena,who will invest $30,000 for a 20 percent interest.The previous capital balances were $30,000 and $60,000 for April and Cammy,respectively.April and Cammy had shared profits equally.What amount will be recorded in Elena's Capital account?

Juan invests $120,000 for a one-fifth interest in a partnership in which the other partners have capital totaling $240,000 before admitting Juan.After distribution of the bonus,Juan's capital is

Lexi invests $80,000 for a one-fourth interest in a partnership in which the other partners have capital totaling $160,000 before admitting Lexi.After distribution of the bonus,what is Lexi's capital balance?

When a partner withdraws from a partnership,an audit might be performed and the assets reappraised.

A partnership agreement need not be in writing.

Partners' Withdrawals accounts have normal debit balances.

Partnership liquidation is not the same as partnership dissolution.

Paul,Quinn,and Ralph have equities in a partnership of $120,000,$180,000,and $100,000,respectively,and share income in a ratio of 2:1:2,respectively.The partners have agreed to admit Sandy to the partnership.Prepare entries in journal form without explanations to record the admission of Sandy to the partnership under each of the following assumptions: a.Sandy invests $100,000 for a 30 percent interest,and a bonus is recorded for Sandy. b.Sandy invests $150,000 for a one-fifth interest,and a bonus is recorded for the old partners.

Which of the following will not result in dissolution of a partnership?

Each partner is personally liable only for his/her share of the debts of the partnership.