Exam 17: Partnership

Jane invests $5,000 for a one-fourth interest in a partnership in which the other partners have capital totaling $20,000 before admitting Jane.After distribution of the bonus,Jane's capital is:

All assets held by a partnership are:

A partnership admits a new partner.The new partner invests $70,000 in the business and receives a credit of $90,000 to his capital account.The difference of $20,000 is called a(n):

The last entry to liquidate a partnership would probably include:

Partners Brian,Josh,and Chad have capital balances of $8,000,$6,000,and $80,000,respectively.The losses for the year are $10,000.What will Josh's capital balance be if the three partners share profits and losses at a 2:2:6 ratio for Brian,Josh,and Chad,respectively?

A profit and loss ratio must be based on capital contributions.

Many associations such as medical centers and law firms could organize as a:

Before calculating salary and interest allowances,it is necessary to determine whether net income will cover these expenses.

John and Brad have average capital balances of $35,000 and $20,000,respectively.The partners have agreed to allow $20,000 salary allowances.The partners will share income and losses in a 1:2 ratio for John and Brad,respectively.How much will each partner's capital account change if net income is $100,000?

Able partner invested cash in the business. Debit ________ Credit ________

Partners Brian,Josh,and Chad have average capital balances of $7,000,$3,000,and $90,000,respectively.Net income for the year is $12,000.Salary allowances are $14,000 for Brian and $5,000 for Josh.Chad gets 10% interest on his capital balance with the remainder being divided at a 1:1:2 ratio for Brian,Josh,and Chad,respectively.What is Brian's capital balance after distributing the net income? (Assume no change in capital balances during the year. )

During liquidation realized more than book value for the merchandise inventory. Debit ________ Credit ________ & ________

Partner B invested inventory using the retail selling price for valuation.Some of the inventory is unsold at period end.This error would cause:

Applying the interest allowance method,compute Taylor and Timmy's share of net income if Taylor invested $300,000 and Timmy invested $700,000 at a 6% interest rate,with the remainder to be divided equally.Net income was $80,000.

Partnerships are not subject to federal income tax.

Mindy and Heather are partners who have agreed to allow Carol to purchase Heather's share for a direct payment of $30,000 to Heather.Mindy and Heather's previous capital balances were $10,000 and $15,000,respectively.What will be the amount in Carol's capital account?

Kate and Joe formed a partnership in 2013.Joe invested $80,000 and Kate invested $50,000.The partnership had $100,000 in income during 2015.There is no agreement as to how income is divided.Kate and Joe's share is:

An investment by a new partner was debited to existing partners' capital balances.This error would cause:

The partnership of Smith and Jones,who have average capital balances of $17,000 and $23,000,respectively,earned $90,000 net income.Under each of the following independent situations,calculate the distribution of the $90,000. a)No agreement was established. b)Share based on their average capital balances.

The business provided services on credit. Debit ________ Credit ________