Exam 19: Accounting for Partnerships

Match the terms with the definitions. -Dissolving of the partnership resulting from any change in the members of the partnership.

After closing the temporary owners' equity accounts into Income Summary, and after allocating the net income and closing the partners' drawing accounts, assume the partners' capital accounts had credit balances as follows: Yang, $20,000; Wolfe, $30,000; Stamatis, $45,000. Partners share profits and losses as follows: Yang, 20%; Wolfe, 30%; and Stamatis, 50%. If Yang purchased Stamatis's interest in the partnership for $40,000 cash, the amount entered in Yang's capital account is a

After closing the temporary owners' equity accounts into Income Summary, and after allocating the net income and closing the partners' drawing accounts, assume the partners' capital accounts had credit balances as follows: Zott, $45,000; Payne, $60,000; Tejada, $47,000. If Tejada retired and withdrew $47,000 in settlement of his equity, the debit to his capital account would be in the amount of

A written agreement containing the various provisions under which a partnership is to operate is known as a partnership agreement.

After closing the temporary owners' equity accounts into Income Summary, and after allocating the net income and closing the partners' drawing accounts, assume the partners' capital accounts had credit balances as follows: Rhodes, $40,000; Serrata, $60,000; Shepard, $75,000. Partners share profits and losses as follows: Rhodes, 20%; Serrata, 30%; and Shepard, 50%. If Shepard retired and withdrew $85,000 in settlement of his equity and settlements are allocated according to capital interests, the amount entered in Rhodes' capital account would be a

Bernstein invests office equipment with a fair market value of $62,000, delivery equipment with a fair market value of $75,000, and cash of $30,000. He owes $27,000, represented by a note on the delivery equipment. The amount of Bernsteins' capital would be

Kristin Anastra and Jesse Turnbull agreed on September 1 to go into business as partners. According to the agreement, Anastra is to contribute $80,000 cash and Turnbull is to contribute $75,000 casH.Required: Provide a separate journal entry for the investment of each partner.

After closing the temporary owners' equity accounts into Income Summary, and after allocating the net income and closing the partners' drawing accounts, assume the partners' capital accounts had credit balances as follows: Ryan, $40,000; O'Malley, $60,000; Sullivan, $45,000. Partners share profits and losses as follows: Ryan, 20%; O'Malley, 30%; and Sullivan, 50%. If Sullivan retired and withdrew $40,000 in settlement of his/her equity and settlements are allocated according to capital interests, the amount entered in Ryan's capital account would be a

Partners may invest property or cash in the partnership, but only property increases their capital account balances.

Only the income statement is affected by the allocation of net income in a partnership.

Since partners' salaries are not treated as an expense of the partnership, it is not necessary to keep a salary expense account for each partner.

When two or more individuals engage in an enterprise as co-owners, the organization is known as a

"Limited life" means

Match the terms with the definitions. -The form of organization in which two or more individuals engage in an enterprise as co-owners.

It is desirable that a partnership agreement be evidenced by a written contract.

Termination of the partnership agreement, bankruptcy of the firm, or death of one of the partners dissolves the partnership.

Soo Yung and Saul Gazza agree to admit Millie Hillsberg into their partnership. The balance sheet of Hillsberg's business as of September 30 is shown below: Yung, Gazza, and Hillsberg agree that the amounts reported on Hillsberg's balance sheet are reasonable approximations of market value. Yung and Gazza agree to purchase all business assets, except cash, and all business liabilities were assumed, in exchange for a $55,000 interest in their partnership. Required: Prepare the journal entry showing Hillsberg's investment in the partnership of Yung and Gazza, as of October 1, 20--.

Partners are taxed on

After several years of operation, the partnership of Raimondo, Rodriguez, and Rosenfeld is being liquidated. After making closing entries on September 30, 20--, the following accounts remain open: Cash 18,000 Merchandise inventory 73,000 Other assets 157,000 Accounts payable 61,000 M. A. Raimondo, capital 50,000 M. E. Rodriguez, capital 50,000 C. R. Rosenfeld, capital 87,000 The noncash assets are sold for $275,000. Profits and losses are shared equally. Required: Prepare journal entries for the following transactions: a. The sale of the noncash assets on October 1. b. Payment of the liabilities on October 15. c. Division of the remaining cash on October 20.

After closing the temporary owners' equity accounts into Income Summary, and after allocating the net income and closing the partners' drawing accounts, assume the partners' capital accounts had credit balances as follows: Peluso, $20,000; Odin, $30,000; Nazaro, $45,000. Partners share profits and losses as follows: Peluso, 20%; Odin, 30%; and Nazaro, 50%. If Peluso purchased Nazaro's interest in the partnership for $40,000 cash, the amount entered in Nazaro's capital account is a