Exam 27: Accounting for Unincorporated Businesses

List four advantages and four disadvantages of the partnership form of business.

It is possible to allocate income to partners based solely on interest.

Income is divided equally among the partners unless the partnership agreement specifies otherwise.

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

Which of the following partnership characteristics is an advantage?

Joan contributes cash of $48,000,and Jamie contributes office equipment that cost $40,000 but is valued at $32,000 to the formation of a new partnership.The entry to record the investments in the partnership is:

The admission of a partner does not change the composition of partners' equity if the new partner purchases the old partner's interest by paying the old partner directly.

Under the partnership form of business,it may be difficult to raise large amounts of capital.

Austin invests $80,000 for a 20 percent interest in a partnership that has capital totaling $300,000 after admitting Austin.Which of the following is true?

Jordan,Kyle,and Noah have equities in a partnership of $100,000,$160,000,and $140,000,respectively,and share income in a ratio of 5:3:2,respectively.The partners have agreed to admit Billy to the partnership.Prepare entries in journal form without explanations to record the admission of Billy to the partnership under each of the following assumptions: a.Billy invests $80,000 for a 25 percent interest,and a bonus is recorded for Billy. b.Billy invests $160,000 for a one-fifth interest,and a bonus is recorded for the old partners.

Income can be allocated to partners based solely on average capital balances.

If the asset accounts did not reflect their current values,the asset accounts would need to be adjusted before admitting the new partner.

Partners A and B receive a salary of $16,000 and $14,000,respectively.They agree to share income equally.If the partnership has income of $280,000 in 20x5,the entry to close the income into their capital accounts is:

Jacob and Megan are partners who share profits in a ratio of 2:3,respectively,and have the following capital balances on September 30,20x5: The partners agree to admit Mitchell to the partnership.Calculate the capital balances of each partner after the admission of Mitchell,assuming that bonuses are recorded when appropriate for each of the following assumptions: a.Mitchell pays Jacob $100,000 for 40 percent of his interest b.Mitchell invests $100,000 for a one-sixth interest in the partnership c.Mitchell invests $100,000 for a 25 percent interest in the partnership d.Mitchell invests $100,000 for a 15 percent interest in the partnership

When individuals invest property in a partnership,the property becomes an asset of the partnership and is owned jointly by the partners.

A liquidation differs from a dissolution in that in a liquidation

As long as the action is within the scope of the partnership,any partner can bind the partnership.

Erin,Rachel,and Travis are partners in ERT Company,with average capital balances for the year of $60,000,$80,000,and $40,000,respectively.They share remaining income in a 2:5:3 ratio,respectively,after each receives a $30,000 salary and 10 percent interest on his or her average capital balance.In the journal provided,prepare the entries without explanations to close income into their Capital accounts,assuming net income of $148,000.

If a partnership agreement does not specify how income is to be distributed,the partners share the income equally.

The division of income is one area in which a partnership differs from a corporation.