Exam 12: Accounting for Partnerships

Faget and Hein sell to Melges a 1/3 interest in the Faget - Hein partnership. Melges will pay Faget and Hein each $140000 for admission into the organization. Before this transaction Faget and Hein show capital balances of $210000 each. The journal entry to record the admission of Melges will

Alex Bob and Ciera are partners sharing income 2:1:2. After selling all of the assets for cash dividing gains and losses on realization and paying liabilities the balances in the capital accounts are as follows: Alex $10000 Cr; Bob $10000 Cr; and Ciera $30000 Cr. How much cash should be distributed to Alex?

Sonoma Company and Woodberry Company decide to merge their proprietorships into a partnership called Sonberry Company. The balance sheet of Woodberry Company shows: Accounts Receivable \ 18,000 Less: Allowance for doubtful accounts \1 6,500 Equipment \2 0,000 Less Accumulated depreciation-equip. \1 0,000 The partners agree that the net realizable value of the receivables is $16000 and that the fair value of the equipment is $15000. Instructions Indicate how the four accounts should appear in the opening balance sheet of the partnership.

A bonus to old partners results when the new partner's capital credit on the date of admittance is greater than his or her investment in the firm.

On November 30 capital balances are Ross $300000 Ellis $250000 and Gise $250000. The income ratios are 20% 20% and 60% respectively. Ross decides to retire from the partnership. The partnership pays Ross $250000 cash for her partnership interest. After Ross's retirement what is the balance of Gise's capital account?

If a partner invests noncash assets in a partnership they should be recorded by the partnership at their fair value.

A partnership

The net income of the Travis and Tucker partnership is $125000. The partnership agreement specifies that profits and losses will be shared equally after salary allowances of $100000 (Travis) and $150000 (Tucker) have been allocated. At the beginning of the year Travis's Capital account had a balance of $250000 and Tucker's Capital account had a balance of $325000. What is the balance of Tucker's Capital account at the end of the year after profits and losses have been distributed?

On November 30 capital balances are Roses $300000 Ellis $25000 and Gise $250000. The income ratios are 20% 20% and 60% respectively. Roses decides to retire from the partnership. The partnership pays Roses $350000 cash for her partnership interest. After Rose's retirement what is the balance of Ellis's capital account?

The liquidation of a partnership

Daggett Lamppin and Pendergast are partners who share profits and losses 50% 30% and 20% respectively. Their capital balances are $150000 $90000 and $60000 respectively. Instructions (a) Assume Sanford joins the partnership by investing $140000 for a 25% interest with bonuses to the existing partners. Prepare the journal entry to record his investment. (b) Assume instead that Daggett leaves the partnership. Daggett is paid $170000 with a bonus to the retiring partner. Prepare the journal entry to record Daggett's withdrawal.

The partners' capital statement includes each of the following except

If a bonus is given to a new partner the old partners' capital accounts are decreased based on their ______________ ratio prior to the admission of the new partner.

Unless stated otherwise in the partnership contract profits and losses are shared among the partners in the ratio of their capital equity balances.

Which of the following statements is correct?

Dawn Garret and Josh have partnership capital account balances of $225000 $450000 and $105000 respectively. The income sharing ratio is Dawn 50%; Garret 40%; and Josh 10%. Dawn desires to withdraw from the partnership and it is agreed that partnership assets of $195000 will be used to pay Dawn for her partnership interest. The balances of Garret's and Josh's Capital accounts after Dawn's withdrawal would be

Brislin Humphreys and Watkins share income and losses in a ratio of 3:2:5 respectively. The capital account balances of the partners are as follows: Instructions Prepare the journal entry on the books of the partnership to record the withdrawal of Watkins under the following independent circumstances: 1. The partners agree that Watkins should be paid $280000 by the partnership for his interest. 2. The partners agree that Watkins should be paid $220000 by the partnership for his interest. 3. Brislin agrees to pay Watkins $180000 for one-half of his capital interest and Heller agrees to pay Watkins $180000 for one-half of his capital interest in a personal transaction among the partners.

In the liquidation of a partnership the gains and losses from assets sold are

The individual assets invested by a partner in a partnership

Ando Dadd and Porter formed a partnership on January 1 2017. Ando invested $60000 Dadd $60000 and Porter $140000. Ando will manage the store and work 40 hours per week in the store. Dadd will work 20 hours per week in the store and Porter will not work. Each partner withdrew 40 percent of his income distribution during 2017. If there was no income distribution to a partner there were no withdrawals of cash. Instructions Compute the partners' capital balances at the end of 2017 under the following independent conditions: (Hint: Use T accounts to determine each partner's capital balances.) (1) Net income is $120000 and the income ratio is Ando 40% Dadd 35% and Porter 25%. (2) Net income is $125000 and the partnership agreement only specifies a salary of $50000 to Ando and $30000 to Dadd. (3) Net income is $76000 and the partnership agreement provides for (a) a salary of $40000 to Ando and $40000 to Dadd (b) interest on beginning capital balances at the rate of 10% and (c) any remaining income or loss is to be shared by Ando 40% Dadd 35% and Porter 25%.