Exam 3: Partnerships

Chante and Olivia decide to accept Sherwood into the partnership.Sherwood will contribute $25,000 in cash,which will also be the amount to be credited to his capital account.Prepare the journal entry to record the transaction.

Schneider withdraws from the SST Partnership.At this time her capital account is $45,000.The remaining partners agree to pay her $45,000 for her interest.Prepare the journal entry to record the withdrawal.

Partners' withdrawals are credited to their withdrawals accounts.

If a partnership contract provides for interest at 10% annually on each partner's investment,the interest

A bonus may be paid

Rachael and Olivia are business partners in RO Dance.Their partnership agreement states that the partners will share income in a 3:2 ratio (Rachael; Olivia).For the year ended December 31,2021,the partnership earned $120,000.During 2021,Rachael withdrew $20,000 cash from the business and Olivial withdrew $10,000 cash.How much income would be allocated to Olivia?

A capital deficiency can arise from liquidation losses,excessive withdrawals,or recurring losses in prior periods.

A capital deficiency exists when all partners have a credit balance in their capital accounts.

Partners' withdrawals of assets are

The partnership agreement gives Yenny 60% and Queyen 40% of partnership incomes or losses.The partnership had a net loss of $32,000.Yenny's share of the loss was $16,200.Queyen's share was $15,800.

Graeme,Bella and Anne are partners with capital balances of $90,000,$70,000,and $50,000,respectively.The partners agreed to share profits and losses as follows: Salary allowances of $7,000 to Graeme,$8,000 to Bella and $14,000 to Anne.Interest allowances of 10% on beginning-of-year capital balances Balance to be divided equally.If profit for the year is $220,000,calculate each partner's share and prepare the appropriate journal entry to close the Income Summary to the capital accounts. Graeme Bella Anne Total Profit to be Divided 220,000 Salary Allowance 7,000 8,000 14,000 Interest Allowance 9,000 7,000 5,000 50,000 Profit Remaining 170,000 Ratio 56,667 56,667 56,667 Share of Profit 72,667 71,667 75,667

Craig and Smith formed a partnership on December 31,2020.Craig contributed $60,000 cash.Justin's investment consisted of cash,$8,000; inventory,$24,000; and supplies,$8,000-all at fair market values.Profit for 2020 and 2021 was $75,000 and $85,000,respectively.Calculate the allocation of profit for 2020 and 2021,assuming profits are divided as follows: (A)The partners have no agreement.(B)Based on a 1:3 ratio.(C)Based on the ratio of the partners' original investments.(D)Interest allowances of 10% on their original investments,salary allowances to Craig of $14,000 and Simpson of $11,000,and the remainder to be divided equally.

Majeau and Horcica are forming a partnership.Majeau will invest equipment that currently is being used by another business owned by Majeau.The equipment has a fair market value of $45,000.Also,the partnership will assume responsibility for a $10,000 note secured the equipment.Horcica will invest $25,000 cash.On the books of the partnership,the amount to be recorded as a credit to Majeau's capital account is

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

The fact that partnership assets are owned jointly by all partners is called

When a partnership is liquidated

A partnership agreement is

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

Armstrong plans to leave the JT Partnership.At this time her capital account is $48,000.The remaining partners,Tanner and Jackson,agree to pay Armstrong $58,000.Prepare the journal entry to record the withdrawal.Assume the partners have no agreement for sharing profits and losses.

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