Exam 12: Accounting for Partnerships

Masco,Short,and Henderson who are partners in the MSH Company share income and loss in a 2:2:1 ratio.They plan to liquidate their partnership.At liquidation,their balance sheet appears as follows.Prepare journal entries for (a)the sale of land and equipment sold as a package for $500,000, (b)the allocation of the gain or loss, (c)the payment of the liabilities,and (d)the distribution of cash to the individual partners.

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

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

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:

Partnership accounting does not:

Palmer withdraws from the FAP Partnership.The remaining partners agree to buy out her share for her capital balance of $65,000.Prepare the journal entry to record the withdrawal from the partnership.

The Redtail Partnership agrees to dissolve.The remaining cash balance after liquidating partnership assets and liabilities is $70,000.The final capital account balances are: Paulson,$35,000;Gray,$25,000;and Chang,$10,000.Prepare the journal entry to distribute the remaining cash to the partners.

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:

When a partner is unable to pay a capital deficiency:

A partner can be admitted into a partnership by _________________________ or by __________________________________. answers can appear in any order

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

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 capital deficiency means that:

Fellows and Marshall are partners in an accounting firm and share net income and loss equally.Fellows' beginning partnership capital balance for the current year is $185,000,and Marshall's beginning partnership capital balance for the current year is $260,000.The partnership had net income of $350,000 for the year.Fellows withdrew $80,000 during the year and Marshall withdrew $70,000.What is Marshall's return on equity?

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?

Bannister invested $110,000 and Wilder invested $99,000 in a new partnership.Their partnership agreement called for Wilder to receive a $70,000 annual salary allowance.Under this agreement,what are the income or loss shares of the partners if the annual partnership income is $90,000?