Deck 12: Accounting for Partnerships

Question 1

The withdrawals account of each partner is closed to retained earnings at the end of the accounting period.

Answer 1

False

Question 2

Partners' withdrawals are debited to their separate withdrawals accounts.

Answer 2

True

Question 3

The statement of changes in partners' equity shows the beginning balance in retained earnings,plus investments,less withdrawals,plus the income (or less the loss)and the ending balance in retained earnings.

Answer 3

False

Question 4

If the partners agree on a formula to share income and say nothing about losses,then the losses are shared using the same formula.

Question 5

Partners in a partnership are taxed on the partnership income,not the amounts they withdraw from the partnership.

Question 6

When partners invest in a partnership,their capital accounts are debited for the amount invested.

Question 7

Mutual agency means each partner can commit or bind the partnership to any contract within the scope of the partnership business.

Question 8

A partnership has a limited life.

Question 9

In closing the accounts at the end of a period,the partners' capital accounts are credited for their share of the partnership net income or debited for their share of the partnership loss.

Question 10

Partner return on equity can be used by each partner to help decide whether additional investment or withdrawal of resources is best for that partner.

Question 11

In a limited partnership the general partner has unlimited liability.

Question 12

Salary allowances are reported as salaries expense on a partnership income statement.

Question 13

A partnership may allocate salary allowances to the partners reflecting the relative value of services provided.

Question 14

Even if partners devote their time and services to their partnership,their salaries are not expenses on the income statement.

Question 15

Partners can invest assets but not liabilities into a partnership.

Question 16

Accounting procedures for both C corporations and S corporations are the same in all aspects.

Question 17

A partnership is an incorporated association of two or more people to pursue a business for profit as co-owners.

Question 18

The equity section of the balance sheet of a partnership can report the separate capital account balances of each partner.

Question 19

In the absence of a partnership agreement,the law says that income of a partnership will be shared equally by the partners.

Question 20

Limited liability partnerships are designed to protect innocent partners from malpractice or negligence claims resulting from the acts of another partner.

Question 21

Pat and Nicole formed Here & There as a limited liability company.Unless the member owners elect to be treated otherwise,the Internal Revenue Service will tax the LLC as:

A)An S corporation.
B)A C corporation.
C)A non-taxable entity.
D)A joint venture.
E)A partnership.

Question 22

R.Stetson contributed $14,000 in cash plus office equipment valued at $7,000 to the SJ Partnership.The journal entry to record the transaction for the partnership is:

A)Debit Cash $14,000;debit Office Equipment $7,000;credit R Stetson,Capital $21,000.
B)Debit Cash $14,000;debit Office Equipment $7,000;credit SJ Partnership,Capital $21,000.
C)Debit SJ Partnership $21,000;credit R.Stetson,Capital $21,000.
D)Debit R.Stetson,Capital $21,000;credit SJ Partnership,Capital $21,000.
E)Debit Cash $14,000;debit Office Equipment $7,000;credit Common Stock $21,000.

Question 23

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)Mutual agency partnership.
B)Limited partnership.
C)Limited liability partnership.
D)General partnership.
E)Limited liability company.

Question 24

Advantages of a partnership include:

A)Limited life.
B)Mutual agency.
C)Unlimited liability.
D)Co-ownership of property.
E)Voluntary association.

Question 25

Mutual agency implies that each partner in a partnership is a fully authorized agent of the partnership.Which of the following statements is correct regarding the authority of a partner to bind the partnership in dealings with third parties?

A)The partner's authority must be derived from the partnership agreement.
B)The partner's authority may be effectively limited by a formal resolution of the other partners,even if third parties are not aware of that limitation.
C)Only a partner with a majority interest in a partnership has the authority to represent the partnership to third parties.
D)A partner has authority to deal with third parties on the behalf of the other partners only if he has written permission to do so.
E)A partner may be able to legally bind the partnership to actions even if the other partners are unaware of his actions.

Question 26

Design Services is organized as a limited partnership,with Miko Toori as one of its partners.Miko's capital account began the year with a balance of $35,000.During the year,Miko's share of the partnership income was $7,500,and Miko received $4,000 in distributions from the partnership.What is Miko's partner return on equity?

A)10.2%
B)22.7%
C)19.5%
D)20.4%
E)21.4%

Question 27

Maxwell and Smart are forming a partnership.Maxwell is investing a building that has a market value of $180,000.However,the building carries a $56,000 mortgage that will be assumed by the partnership.Smart is investing $120,000 cash.The balance of Maxwell's Capital account will be:

A)$180,000.
B)$124,000.
C)$56,000.
D)$64,000.
E)$60,000.

Question 28

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from acts of another partner is a(n):

A)Partnership.
B)Limited partnership.
C)Limited liability partnership.
D)General partnership.
E)Unlimited liability company.

Question 29

An unincorporated association of two or more persons to pursue a business for profit as co-owners is a:

A)Partnership.
B)Proprietorship.
C)Contractual company.
D)Mutual agency.
E)Voluntary organization.

Question 30

Partners' withdrawals of assets are:

A)Credited to their withdrawals accounts.
B)Debited to their withdrawals accounts.
C)Credited to their retained earnings.
D)Debited to their retained earnings.
E)Debited to their asset accounts.

Question 31

A partnership in which all partners have mutual agency and unlimited liability is called:

A)Limited partnership.
B)Limited liability partnership.
C)General partnership.
D)S corporation.
E)Limited liability company.

Question 32

Forman and Berry are forming a partnership.Forman will invest a building that currently is being used by another business owned by Forman.The building has a market value of $80,000.Also,the partnership will assume responsibility for a $20,000 note secured by a mortgage on that building.Berry will invest $50,000 cash.For the partnership,the amounts to be recorded for the building and for Forman's Capital account are:

A)Building,$80,000 and Forman,Capital,$80,000.
B)Building,$60,000 and Forman,Capital,$60,000.
C)Building,$60,000 and Forman,Capital,$50,000.
D)Building,$80,000 and Forman,Capital,$60,000.
E)Building,$60,000 and Forman,Capital,$80,000.

Question 33

T.Andrews contributed $14,000 in to the T & B Partnership.The journal entry to record the transaction for the partnership is:

A)Debit Cash $14,000;credit T & B Partnership,Capital $14,000.
B)Debit Cash $14,000;credit T.Andrews,Capital $14,000.
C)Debit T & B Partnership $14,000;credit T.Andrews,Capital $14,000.
D)Debit T.Andrews,Capital $14,000;credit T & B Partnership,Capital $14,000.
E)Debit Cash $14,000;credit Common Stock $14,000.

Question 34

Mutual agency means

A)Creditors can apply their claims to partners' personal assets.
B)Partners are taxed on partnership withdrawals.
C)All partners must agree before the partnership can act.
D)The partnership has a limited life.
E)A partner can commit or bind the partnership in any contract within the scope of the partnership business.

Question 35

A partnership agreement:

A)Is not binding unless it is in writing.
B)Is the same as a limited liability partnership.
C)Is binding even if it is not in writing.
D)Does not generally address the issue of the rights and duties of the partners.
E)Is also called the articles of incorporation.

Question 36

Partnership accounting does not:

A)Use a capital account for each partner.
B)Use a withdrawals account for each partner.
C)Allocate net income to each partner according to the partnership agreement.
D)Allocate net loss to each partner according to the partnership agreement.
E)Tax the business entity.

Question 37

Carter Pearson is a partner in Event Promoters.His beginning partnership capital balance for the current year is $55,000,and his ending partnership capital balance for the current year is $62,000.His share of this year's partnership income was $6,250.What is his partner return on equity?

A)5.34%
B)8.93%
C)10.08%
D)11.36%
E)10.68%

Question 38

The following information is available regarding Grace Smit's capital account in Enterprise Consulting Group,a general partnership,for a recent year: What is Smit's partner return on equity during the year in question?

A)36.6%
B)34.7%
C)10.8%
D)11.4%
E)55.7%

Question 39

Partnership accounting is the same as accounting for:

A)A sole proprietorship.
B)A corporation.
C)A sole proprietorship,except that separate capital and withdrawal accounts are kept for each partner.
D)An S corporation.
E)A corporation,except that retained earnings is used to keep track of partners' withdrawals.

Question 40

The withdrawals account of each partner is:

A)Closed to that partner's capital account with a credit.
B)Closed to that partner's capital account with a debit.
C)A permanent account that is not closed.
D)Credited with that partner's share of net income.
E)Debited with that partner's share of net loss.

Question 41

A partnership recorded the following journal entry: This entry reflects:

A)Acceptance of a new partner who invests $60,000 and receives a $20,000 bonus.
B)Withdrawal of a partner who pays a $10,000 bonus to each of the other partners.
C)Addition of a partner who pays a bonus to each of the other partners.
D)Additional investment into the partnership by Founder and Aqui.
E)Withdrawal of $10,000 each by Founder and Aqui upon the admission of a new partner.

Question 42

The partnership agreement for Wilson,Pickett & Nelson,a general partnership,provided that profits be shared between the partners in the ratio of their financial contributions to the partnership.Wilson contributed $100,000,Pickett contributed $50,000 and Nelson contributed $50,000.In the partnership's first year of operation,it incurred a loss of $110,000.What amount of the partnership's loss,rounded to the nearest dollar,should be absorbed by Nelson?

A)$50,000
B)$27,500
C)$36,667
D)$0
E)$40,000

Question 43

Olivia Greer is a partner in Made for You.An analysis of Greer's capital account indicates that during the most recent year,she withdrew $30,000 from the partnership.Her share of the partnership's net loss was $16,000 and she made an additional equity contribution of $10,000.Her capital account ended the year at $150,000.What was her capital balance at the beginning of the year?

A)$154,000
B)$170,000
C)$180,000
D)$186,000
E)$196,000

Question 44

Wheadon,Davis,and Singer formed a partnership with Wheadon contributing $60,000,Davis contributing $50,000 and Singer contributing $40,000.Their partnership agreement called for the income (loss)division to be based on the ratio of capital investments.If the partnership had income of $75,000 for its first year of operation,what amount of income (rounded to the nearest thousand)would be credited to Wheadon's capital account?

A)$20,000.
B)$25,000.
C)$30,000.
D)$40,000.
E)$75,000.

Question 45

Dalworth and Minor have decided to form a partnership.Minor is going to contribute a depreciable asset to the partnership as her equity contribution to the partnership.The following information regarding the asset to be contributed by Minor is available: Based on this information,Minor's beginning equity balance in the partnership will be:

A)$276,000
B)$158,000
C)$136,000
D)$127,000
E)$18,000

Question 46

Christie and Jergens formed a partnership with capital contributions of $300,000 and $400,000,respectively.Their partnership agreement calls for Christie to receive a $60,000 per year salary.Also,each partner is to receive an interest allowance equal to 10% of a partner's beginning capital investments.The remaining income or loss is to be divided equally.If the net income for the current year is $135,000,then Christie and Jergens's respective shares are:

A)$67,500;$67,500.
B)$92,500;$42,500.
C)$57,857;$77,143.
D)$90,000;$40,000.
E)$35,000;$100,000.

Question 47

Zheng invested $100,000 and Murray invested $200,000 in a partnership.They agreed to share incomes and losses by allowing a $60,000 per year salary allowance to Zheng and a $40,000 per year salary allowance to Murray,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 $105,000 in income are:

A)$52,500 to Zheng;$52,500 to Murray.
B)$35,000 to Zheng;$70,000 to Murray.
C)$57,500 to Zheng;$47,500 to Murray.
D)$42,500 to Zheng;$62,500 to Murray.
E)$70,000 to Zheng;$60,000 to Murray.

Question 48

In the absence of a partnership agreement,the law says that income (and loss)should be allocated based on:

A)A fractional basis.
B)The ratio of capital investments.
C)Salary allowances.
D)Equal shares.
E)Interest allowances.

Question 49

Brown invested $200,000 and Freeman invested $150,000 in a partnership.They agreed to 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 $205,000 in income are:

A)$102,500 to Brown;$102,500 to Freeman.
B)$117,143 to Brown;$87,857 to Freeman.
C)$122,500 to Brown;$82,500 to Freeman.
D)$105,000 to Brown;$100,000 to Freeman.
E)$112,750 to Brown;$92,250 to Freeman.

Question 50

In a partnership agreement,if the partners agreed to an interest allowance of 10% annually on each partner's investment,the interest allowance:

A)Is ignored when earnings are not sufficient to pay interest.
B)Can make up for unequal capital contributions.
C)Is an expense of the business.
D)Must be paid because the partnership contract has unlimited life.
E)Legally becomes a liability of the general partner.

Question 51

Which of the following statements is true?

A)Partners are employees of the partnership.
B)Salaries to partners are expenses on the partnership income statement.
C)Salary allowances usually reflect the relative value of services provided by partners.
D)Salary allowances are expenses.
E)Interest allowances are expenses.

Question 52

When a partner is added to a partnership:

A)The previous partnership ends.
B)The underlying business operations end.
C)The underlying business operations must close and then re-open.
D)The partnership must continue.
E)The partnership equity always increases.

Question 53

Wheadon,Davis,and Singer formed a partnership with Wheadon contributing $60,000,Davis contributing $50,000 and Singer contributing $40,000.Their partnership agreement called for the income (loss)division to be based on the ratio of capital investments.If the partnership had income of $75,000 for its first year of operation,what amount of income (rounded to the nearest thousand)would be credited to Singer's capital account?

A)$20,000.
B)$25,000.
C)$30,000.
D)$40,000.
E)$75,000.

Question 54

A partner can withdraw from a partnership by any of the following means except:

A)Selling his/her interest to another person for cash.
B)Selling his/her interest to another person in exchange for assets.
C)Receiving cash from the partnership in the amount of his/her interest.
D)Receiving assets from the partnership in the amount of his/her interest.
E)Close the business and liquidate the assets under the mutual agency principle.

Question 55

The following information is available on PDC Enterprises,a partnership,for the most recent fiscal year: There are three partners in TGR Enterprises: Pearson,Darling and Cathay.At the end of the year,the partners' capital accounts were in the ratio of 2:2:1,respectively.Compute the ending capital balances of Cathay.

A)$466,000.
B)$402,000.
C)$416,000.
D)$544,000.
E)$388,000.

Question 56

The following information is available on TGR Enterprises,a partnership,for the most recent fiscal year: There are three partners in TGR Enterprises: Tracey,Gregory and Rodgers.At the end of the year,the partners' capital accounts were in the ratio of 2:1:2,respectively.Compute the ending capital balances of the three partners.

A)Tracey = $108,000;Gregory = $54,000;Rodgers = $108,000.
B)Tracey = $90,000;Gregory = $90,000;Rodgers = $90,000.
C)Tracey = $204,000;Gregory = $102,000;Rodgers = $204,000.
D)Tracey = $84,000;Gregory = $102,000;Rodgers = $84,000.
E)Tracey = $60,000;Gregory = $30,000;Rodgers = $60,000.

Question 57

A bonus may be paid in all of the following situations except:

A)By a new partner when the current value of a partnership is greater than the recorded amounts of equity.
B)By a withdrawing partner to remaining partners if the recorded value of the equity is overstated.
C)To a new partner with exceptional talents.
D)By remaining partners to a withdrawing partner if the recorded equity is understated.
E)By an existing partner to him or herself when in need of personal cash flow.

Question 58

Farmer and Taylor formed a partnership with capital contributions of $200,000 and $250,000,respectively.Their partnership agreement calls for Farmer to receive a $70,000 per year salary.The remaining income or loss is to be divided equally.If the net income for the current year is $135,000,then Farmer and Taylor's respective shares are:

A)$67,500;$67,500.
B)$130,000;$5,000.
C)$106,140;$28,860.
D)$90,000;$45,000.
E)$102,500;$32,500.

Question 59

Harvey and Quick have decided to form a partnership.Harvey is going to contribute a depreciable asset to the partnership as his equity contribution to the partnership.The following information regarding the asset to be contributed by Harvey is available: Based on this information,Harvey's beginning equity balance in the partnership will be:

A)$76,000
B)$36,000
C)$18,000
D)$27,000
E)$45,000

Question 60

Wright,Bell,and Edison are partners and share income in a 2:5:3 ratio.The partnership's capital balances are as follows: Wright,$33,000,Bell $27,000 and Edison $40,000.Edison decides to withdraw from the partnership,and the partners agree not to revalue the assets upon Edison's retirement.The journal entry to record Edison's June 1 withdrawal from the partnership if Edison sells his interest to Whitney for $45,000 after the other two partners approve Whitney as partner is:

A)Debit Edison,Capital $45,000;credit Whitney,Capital $45,000.
B)Debit Edison,Capital $40,000;credit Cash $40,000.
C)Debit Edison,Capital $40,000;debit Wright,Capital $2,500;debit Bell,Capital $2,500;credit Whitney,Capital $45,000.
D)Debit Edison,Capital $40,000;credit Whitney,Capital $40,000.
E)Debit Edison,Capital $40,000;debit Cash $5,000;credit Whitney,Capital $45,000.

Question 61

Fontaine and Monroe are forming a partnership.Fontaine invests a building that has a market value of $250,000;the partnership assumes responsibility for a $75,000 note secured by a mortgage on the property.Monroe invests $100,000 in cash and equipment that has a market value of $55,000.For the partnership,the amounts recorded for total assets and for total capital account are:

A)Total assets $405,000;total capital $330,000.
B)Total assets $350,000;total capital $350,000.
C)Total assets $350,000;total capital $275,000.
D)Total assets $305,000;total capital $230,000.
E)Total assets $405,000;total capital $305,000.

Question 62

Cox,North,and Lee form a partnership.Cox contributes $180,000,North contributes $150,000,and Lee contributes $270,000.Their partnership agreement calls for a 5% interest allowance on the partner's capital balances with the remaining income or loss to be allocated equally.If the partnership reports income of $150,000 for its first year,what amount of income is credited to North's capital account?

A)$50,000.
B)$63,500.
C)$61,500.
D)$47,500.
E)$45,000.

Question 63

When a partnership is liquidated:

A)Noncash assets are distributed to partners.
B)Any gain or loss on liquidation is allocated to the partner with the highest capital account balance.
C)Liabilities are paid or settled.
D)Any remaining cash is distributed to the partners equally.
E)The business may continue to operate.

Question 64

Fontaine and Monroe are forming a partnership.Fontaine invests a building that has a market value of $250,000;the partnership assumes responsibility for a $75,000 note secured by a mortgage on the property.Monroe invests $100,000 in cash and equipment that has a market value of $55,000.For the partnership,the amounts recorded for Fontaine's Capital account and for Monroe's Capital account are:

A)Fontaine,Capital $175;Monroe,Capital $45,000.
B)Fontaine,Capital $0;Monroe,Capital $100,000.
C)Fontaine,Capital $250,000;Monroe,Capital $100,000.
D)Fontaine,Capital $250,000;Monroe,Capital $155,000.
E)Fontaine,Capital $175,000;Monroe,Capital $155,000.

Question 65

Cox,North,and Lee form a partnership.Cox contributes $180,000,North contributes $150,000,and Lee contributes $270,000.Their partnership agreement calls for a 5% interest allowance on the partner's capital balances with the remaining income or loss to be allocated equally.If the partnership reports income of $174,000 for its first year,what amount of income is credited to Lee's capital account?

A)$58,000.
B)$57,000.
C)$61,500.
D)$55,500.
E)$48,000.

Question 66

Henry,Luther,and Gage 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 Henry,$45,000;Luther,$37,000;and Gage,$(5,000).After all assets are sold and liabilities are paid,there is $77,000 in cash to be distributed.Gage is unable to pay the deficiency.The journal entry to record the distribution should be:

A)Debit Henry,Capital $25,667;debit Luther,Capital $25,667;debit Gage,Capital $25,666;credit Cash $77,000.
B)Debit Henry,Capital $42,500;debit Luther,Capital $34,500;credit Cash $77,000.
C)Debit Henry,Capital $45,000;debit Luther,Capital $37,000;credit Gage,Capital $5,000;credit Cash $77,000.
D)Debit Cash $77,000,debit Gage,Capital $5,000,credit Henry,Capital $45,000,credit Luther,Capital $37,000.
E)Debit Cash $77,000;credit Henry,Capital $25,667;credit Luther,Capital $25,667;credit Gage,Capital $25,666.

Question 67

Peters and Chong are partners and share equally in income or loss.Peters' current capital balance is $140,000 and Chong's is $130,000.Peters and Chong agree to accept Aaron with a 30% interest in the partnership.Aaron invests $98,000 in the partnership.The balances in Peters's and Chong's capital accounts after admission of the new partner equal:

A)Peters $140,000;Chong $130,000.
B)Peters $146,200;Chong $136,200.
C)Peters $145,000;Chong $135,000.
D)Peters $133,800;Chong $123,800.
E)Peters $166,027;Chong $156,027.

Question 68

When a partner is unable to pay a capital deficiency:

A)The partner must take out a loan to cover the deficient balance.
B)The deficiency is absorbed by the remaining partners before distribution of cash.
C)The partnership ends before distribution of cash.
D)The deficient partner is relieved of the liability.
E)The remaining partners must wait for the deficiency to be paid before cash is distributed.

Question 69

Cox,North,and Lee form a partnership.Cox contributes $180,000,North contributes $150,000,and Lee contributes $270,000.Their partnership agreement calls for the income or loss division to be based on the ratio of capital invested.If the partnership reports income of $150,000 for its first year,what amount of income is credited to Lee's capital account?

A)$50,000.
B)$67,500.
C)$45,000.
D)$54,000.
E)$60,000.

Question 70

Mace and Bowen are partners and share equally in income or loss.Mace's current capital balance is $135,000 and Bowen's is $120,000.Mace and Bowen agree to accept Kent with a 30% interest in the partnership.Kent invests $115,000 in the partnership.The amount credited to Kent's capital account is:

A)$111,000.
B)$115,000.
C)$92,500.
D)$120,000.
E)$119,000.

Question 71

Mace and Bowen are partners and share equally in income or loss.Mace's current capital balance is $135,000 and Bowen's is $120,000.Mace and Bowen agree to accept Kent with a 30% interest in the partnership.Kent invests $115,000 in the partnership.The balances in Mace's and Bowen's capital accounts after admission of the new partner equal:

A)Mace $135,000;Bowen $120,000.
B)Mace $137,000;Bowen $122,000.
C)Mace $133,000;Bowen $118,000.
D)Mace $139,000;Bowen $120,000.
E)Mace $135,000;Bowen $124,000.

Question 72

A capital deficiency means that:

A)The partnership has a loss.
B)The partnership has more liabilities than assets.
C)At least one partner has a debit balance in his/her capital account.
D)At least one partner has a credit balance in his/her capital account.
E)The partnership has been sold at a loss.

Question 73

Hewlett and Martin are partners.Hewlett's capital balance in the partnership is $64,000,and Martin's capital balance $61,000.Hewlett and Martin have agreed to share equally in income or loss.Hewlett and Martin agree to accept Black with a 25% interest.Black will invest $35,000 in the partnership.The bonus that is granted to Black equals:

A)$5,000.
B)$2,500.
C)$6,667.
D)$3,333.
E)$0,because Black must actually grant a bonus to Hewlett and Martin.

Question 74

Wright,Bell,and Edison are partners and share income in a 2:5:3 ratio.The partnership's capital balances are as follows: Wright,$33,000,Bell $27,000 and Edison $40,000.Edison decides to withdraw from the partnership,and the partners agree not to revalue the assets upon Edison's retirement.The journal entry to record Edison's June 1 withdrawal from the partnership if Edison is paid $40,000 for his equity is:

A)Debit Edison,Capital $40,000;credit Cash $40,000.
B)Debit Wright,Capital $20,000;Debit Bell,Capital $20,000;credit Cash $40,000.
C)Debit Wright,Capital $20,000;Debit Bell,Capital $20,000;credit Edison,Capital $40,000.
D)Debit Edison,Capital $40,000;credit Wright,Capital $20,000;credit Bell,Capital $20,000.
E)Debit Cash $40,000;credit Edison,Capital $40,000.

Question 75

Henry,Luther,and Gage 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 Henry,$45,000;Luther,$37,000;and Gage,$(5,000).After all assets are sold and liabilities are paid,there is $77,000 in cash to be distributed.Gage is unable to pay the deficiency.What amount of cash will Gage receive upon liquidation?

A)$25,667.
B)$20,667.
C)$30,667.
D)Gage will be invoiced for $5,000.
E)$0.

Question 76

Masters,Hardy,and Rowen are dissolving their partnership.Their partnership agreement allocates income and losses equally among the partners.The current period's ending capital account balances are Masters,$15,000;Hardy,$15,000;Rowen,$(2,000).After all the assets are sold and liabilities are paid,but before any contributions to cover any deficiencies,there is $28,000 in cash to be distributed.Rowen pays $2,000 to cover the deficiency in his account.The general journal entry to record the final distribution would be:

A)Debit Masters,Capital $15,000;debit Hardy,Capital $15,000;credit Cash $30,000.
B)Debit Masters,Capital $14,000;debit Hardy,Capital $14,000;credit Cash $28,000.
C)Debit Masters,Capital $15,000;debit Hardy,Capital $15,000;credit Rowen,Capital $2,000;credit Cash $28,000.
D)Debit Cash $28,000;debit Rowen,Capital $2,000;credit Masters,Capital $15,000;credit Hardy,Capital $15,000.
E)Debit Masters,Capital $9,334;debit Hardy,Capital $9,333;debit Rowen,Capital $9,333;credit Cash $28,000.

Question 77

Hewlett and Martin are partners.Hewlett's capital balance in the partnership is $64,000,and Martin's capital balance $67,000.Hewlett and Martin have agreed to share equally in income or loss.The existing partners agree to accept Black with a 20% interest.Black will invest $35,000 in the partnership.The bonus that is granted to Hewlett and Martin equals:

A)$900 each.
B)$1,500 each.
C)$600 each.
D)600 to Hewlett;$900 to Martin.
E)$0,because Hewlett and Martin actually grant a bonus to Black.

Question 78

Masters,Hardy,and Rowen are dissolving their partnership.Their partnership agreement allocates income and losses equally among the partners.The current period's ending capital account balances are Masters,$15,000;Hardy,$15,000;Rowen,$30,000.After all the assets are sold and liabilities are paid,but before any contributions to cover any deficiencies,there is $54,000 in cash to be distributed.The general journal entry to record the final distribution would be:

A)Debit Masters,Capital $18,000;debit Hardy,Capital $18,000;debit Rowen,Capital $18,000;credit Cash $54,000.
B)Debit Masters,Capital $13,500;debit Hardy,Capital $13,500;debit Rowen,Capital $27,000;credit Cash $54,000.
C)Debit Masters,Capital $15,000;debit Hardy,Capital $15,000;debit Rowen,Capital $30,000;credit Gain from Liquidation $6,000;credit Cash $54,000.
D)Debit Cash $54,000;credit Rowen,Capital $13,500;credit Masters,Capital $13,500;credit Hardy,Capital $27,000.
E)Debit Masters,Capital $15,000;debit Hardy,Capital $15,000;debit Rowen,Capital $30,000;credit Retained Earnings $6000;credit Cash $54,000.

Question 79

Cox,North,and Lee form a partnership.Cox contributes $180,000,North contributes $150,000,and Lee contributes $270,000.Their partnership agreement calls for the income or loss division to be based on the ratio of capital invested.If the partnership reports income of $150,000 for its first year,what amount of income is credited to Cox's capital account?

A)$50,000.
B)$64,286.
C)$45,000.
D)$36,000.
E)$60,000.

Question 80

Fontaine and Monroe are forming a partnership.Fontaine invests a building that has a market value of $250,000;the partnership assumes responsibility for a $75,000 note secured by a mortgage on the property.Monroe invests $100,000 in cash and equipment that has a market value of $55,000.For the partnership,the amounts recorded for the building and for Fontaine's Capital account are:

A)Building $250,000;Fontaine,Capital $250,000.
B)Building $175,000;Fontaine,Capital $175,000.
C)Building $250,000;Fontaine,Capital $75,000.
D)Building $250,000;Fontaine,Capital $175,000.
E)Building $175,000;Fontaine,Capital $75,000.