Exam 12: Accounting for Partnerships

The total column of the Partners' Capital Statement for DeltaBell Company is as follows: Capital, January 1 \6 00,000 Additional investment. 240,000 Drawings. 360,000 Net income 720,000 The partnership has three partners. The first two partners have ending capital balances that are equal. The ending balance of the third partner is half of the ending balance of the first partner. What is the ending capital balance of the third partner?

An interest allowance in sharing partnership net income (or net loss) is related to the amount of partners' invested capital during the period.

When a partner invests noncash assets in a partnership the assets should be recorded at their

Which one of the following would not be considered a disadvantage of the partnership form of organization?

The MFP Partnership is to be liquidated when the ledger shows the following: Cash \ 50,000 Noncash Assets 200,000 Liabilities 50,000 Mossimo, Capital 75,000 Fandango, Capital 100,000 Plank, Capital 25,000 Mossimo Fandango and Plank's income ratios are 6:3:1 respectively. Instructions Prepare separate entries to record the liquidation of the partnership assuming that the noncash assets are sold for $140000 in cash.

The most appropriate basis for dividing partnership net income when the partners do not plan to take an active role in daily operations is

Rich Tracy and Mark are partners who share profits 40% 20% and 40%. Their capital balances were $630000 $420000 and $210000 respectively before Mark's retirement. Mark was paid $240000 from partnership assets to buy his interest. Instructions Compute the capital balances of Rich and Tracy after Mark has withdrawn.

Michelle receives $210000 and Stephanie receives $140000 in a split of $350000 net income. Which expression does not reflect the income splitting arrangement?

Partnership income or loss need not be closed to partners' capital accounts each period because of the unlimited life characteristic of partnerships.

In a liquidation the final distribution of cash to partners should be on the basis of their income ratios.