Exam 12: Accounting for Partnerships

Brian and Sandy are forming a partnership. Brian will invest a truck with a book value of $10000 and a fair value of $14000. Sandy will invest a building with a book value of $30000 and a fair value of $42000 with a mortgage of $15000. What amount should be recorded in Sandy's capital account?

The partnership form of business is

Kim Locke and Mary Leigh Coker have capital accounts of $420000 and $480000 respectively. Jeff Doggett and Danny Cambrey are to join the partnership. Doggett invests $425000 in the partnership for which he receives a capital credit of $425000. Cambrey purchases a one-half interest from Locke for $300000 and a one-fourth interest from Coker for $90000. Instructions (a) Prepare the journal entries to record the admission of Doggett and Cambrey to the partnership. (b) Determine the capital balances of the partners after the admission of Doggett and Cambrey.

The Partners' Capital Statement for TSB Company reported the following information in total: Capital, January 1 \2 40,000 Additional investment. 80,000 Drawings. 160,000 Net income 200,000 The partnership has three partners: Toub Sauls and Birch with ending capital balances in a ratio 40:20:40. What are the respective ending balances of the three partners?

In an admission of a partner by investment of assets the total net assets and total capital of the partnership do not change.

The Salinas-Milliken partnership is terminated when creditor claims exceed partnership assets by $80000. Salinas is a millionaire and Milliken has no personal assets. Milliken's partnership interest is 75% and Salinas's is 25%. Creditors

Once assets have been invested in the partnership they are owned jointly by all partners.

If a partner's investment in a partnership consists of Accounts Receivable of $35000 and an Allowance for Doubtful Accounts of $7000 it would not be appropriate for the partnership to record the Allowance for Doubtful Accounts.

Match the items below by entering the appropriate code letter in the space provided.

Which of the following is correct when admitting a new partner into an existing partnership? $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ A) Total net assets unchanged unchanged B) Total capital increased unchanged C) Total net assets unchanged increased D) Total capital unchanged unchanged

Ron Marden and Tip Baker operate separate auto repair shops. On January 1 2017 they decide to combine their separate businesses which were operated as proprietorships to form M & B Auto Repair a partnership. Information from their separate balance sheets is presented below: Marden Auto Repair Baker Auto Repair Cash \ 10,000 \ 14,000 Accounts receivable 12,000 10,000 Allowance for doubtful accounts 1,000 500 Accounts payable 5,000 6,000 Notes payable - 3,000 Salaries and wages payable 1,000 1,500 Equipment 12,000 24,000 Accumulated depreciation—equipment 2,000 4,000 It is agreed that the expected realizable value of Marden's accounts receivable is $11000 and Baker's receivables is $7000. The fair value of Marden's equipment is $13000 and the value of Baker's equipment is $20000. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the notes payable on Baker's balance sheet which he will pay himself. Instructions Prepare the journal entries necessary to record the formation of the partnership.

The partnership agreement of Ashford and Cohen provides for salary allowances of $90000 to Ashford and $70000 to Cohen with the remaining income or loss to be divided equally. During the year Ashford and Cohen each withdraw cash equal to 80% of their salary allowances. If partnership net income is $200000 Ashford's equity in the partnership would

In a partnership mutual agency means

The balance sheet of a partnership will

The Gorni Chambers and Hale partnership is terminated when the claims of company creditors exceed partnership assets by $100000. The capital balances for Gorni Chambers and Hale are $70000 $10000 and $0 respectively. The original claims of the creditors were negotiated by Chambers and Hale. Which partner(s) is(are) personally and individually liable for all partnership liabilities?

A bonus to a new partner

Prepare a partners' capital statement for Whatito Company based on the following information. Beginning capital \ 30,000 \ 27,000 Drawings during year 15,000 8,000 Net income was $45000 and the partners share income 60% to Whatley and 40% to Hito.

In liquidation balances prior to the distribution of cash to the partners are: Cash $900000; Peterson Capital $420000; Laney Capital $390000 and Howell Capital $90000. The income ratio is 6:2:2 respectively. How much cash should be distributed to Peterson?

The owners' equity statement for a partnership is called the

The Zhuzer Company at December 31 has cash $50000 noncash assets $250000 liabilities $138000 and the following capital balances: Zhu $112000 and Zerkel $50000. The firm is liquidated and $265000 in cash is received for the noncash assets. Zhu and Zerkel income ratios are 60% and 40% respectively. Instructions Prepare the entries to record: (a) The sale of noncash assets. (b) The allocation of the gain or loss on liquidation to the partners. (c) Payment of creditors. (d) Distribution of cash to the partners.