Exam 19: Accounting for Partnerships

Peter Nguyen and Loren Washington are partners who share profits and losses in the ratio of 60:40,respectively.On December 31,2016,they decide that Washington will sell one-half of her interest to Grace Dolores.At that time,the balances of the capital accounts are $75,000 for Nguyen and $45,000 for Washington.The partners agree that before the new partner is admitted,certain assets should be revalued.These assets include merchandise inventory carried at $42,000 revalued at $48,000,and a building with a book value of $100,000 revalued at $120,000.On page 10 of a general journal,record the revaluation entries.Omit descriptions.Then,determine the capital balances of the two existing partners after the revaluation is made.

Nancy Conradt and Chris Russell are partners who share profits and losses in the ratio of 60:40,respectively.On December 31,2016,they decide that Russell will sell one-half of his interest to Pam Ortega.At that time,the balances of the capital accounts are $500,000 for Conradt and $700,000 for Russell.The partners agree that before the new partner is admitted,certain assets should be revalued.These assets include merchandise inventory carried at $411,200 revalued at $403,600,and a building with a book value of $260,000 revalued at $450,000.On page 10 of a general journal,record the revaluation entries.Omit descriptions.Then,determine the capital balances of the two existing partners after the revaluation is made.

The assets of a sole proprietorship are revalued before they are assumed by a partnership.

Ryan Fuller,a sole proprietor,entered into partnership with another individual.Fuller's investment in the partnership included equipment that cost $32,000 when it was purchased.The equipment has a book value of $13,000 and a net agreed-on value of $16,000.In the financial records of the partnership,this equipment and its accumulated depreciation should be recorded at

Robert Ballard,a sole proprietor,entered into partnership with another individual.Ballard's investment in the partnership included equipment that cost $64,000 when it was purchased.The equipment has a book value of $26,000 and a net agreed-on value of $32,000.In the financial records of the partnership,this equipment and its accumulated depreciation should be recorded at

Gains on the revaluation of assets and liabilities upon the dissolution of a partnership are taxable to each partner.

Salary and interest allowances are considered in distributing net income to partners but not in distributing a net loss.

Unlike a corporation,a partnership does not pay income tax.

Spalding,Dane,and Manson are partners,sharing profits and losses in the ratio of 30,40,and 30 percent respectively.Their partnership agreement provides that if one of them withdraws from the partnership,the assets and liabilities are to be revalued,the gain or loss allocated to the partners,and the retiring partner paid the balance of his account.Manson withdraws from the partnership on December 31,2016.The capital account balances before recording revaluation are Spalding,$230,000;Dane,$250,000;and Manson,$220,000.The effect of the revaluation is to increase Merchandise Inventory by $21,000 and the Building account balance by $41,000.How much cash will be paid to Manson?

Ben White and Lisa Caputi are partners,and each has a capital balance of $75,000.To gain admission to the partnership,Tim Smith pays $50,000 directly to White for one-half of his equity.After the admission of Smith,the total partners' equity in the records of the partnership will be

Antonio Bandala wishes to retire and sell his partnership interest valued at $170,000 to the remaining partners.Prepare the journal entry to record the withdrawal from the partnership.

Brian Colt and Karen Randall are partners who share profits and losses in the ratio of 70:30,respectively.On December 31,2016,they decide that Randall will sell one-half of her interest to Jane Wu.At that time,the balances of the capital accounts are $70,000 for Colt and $30,000 for Randall.The partners agree that before the new partner is admitted,certain assets should be revalued.These assets include merchandise inventory carried at $11,000 revalued at $10,000,and a building with a book value of $60,000 revalued at $70,000.On page 10 of a general journal,record the revaluation entries.Omit descriptions.Then,determine the capital balances of the two existing partners after the revaluation is made.

A partnership has a limited life.It ends with the death or withdrawal of a partner.

Each general partner has ____________________ liability for the debts of a partnership.

Partnership net income of $66,000 is to be divided between two partners,Julia Hood and Brian Duffy,according to the following arrangement: There will be salary allowances of $40,000 for Hood and $20,000 for Duffy,with the remainder divided equally.How much of the net income will be distributed to Hood and Duffy,respectively?

Family partnerships enable family members to pool funds for investment purposes and are designed to minimize tax obligations on the transfer of property,business interests and investments.

The salary and interest allowances in a partnership profit-sharing agreement can best be described as

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

The statement of partners' equities summarizes the changes in the partners' _________________ accounts in an accounting period.

Which of the following statements is not correct?