Exam 12: Accounting for Partnerships

In liquidation balances prior to the distribution of cash to the partners are: Cash $765000; Peterson Capital $420000; Laney Capital $390000 and Howell Capital $45000 deficiency. The income ratio is 6:2:2 respectively. How much cash should be distributed to Laney if Howell does not pay his deficiency?

Which of the following would not cause an increase in partnership capital?

Wiggins L. Stokes and K. Hayes are forming a partnership. Wiggins is transferring $75000 of personal cash to the partnership. Stokes owns land worth $25000 and a small building worth $120000 which she transfers to the partnership. Hayes transfers to the partnership cash of $14000 accounts receivable of $48000 and equipment worth $28000. The partnership expects to collect $45000 of the accounts receivable. Instructions (a) Prepare the journal entries to record each of the partners' investments. (b) What amount would be reported as total owners' equity immediately after the investments?

Yuanne Sipp and Letitia Grimes share partnership income on a 3:2 basis. They have capital balances of $560000 and $280000 respectively when Tammy Tuck is admitted to the partnership. Instructions Prepare the journal entry to record the admission of Tammy Tuck under each of the following assumptions: (a) Tuck invests $320000 for a 25% ownership interest. (b) Tuck invests $220000 for a 25% ownership interest. (c) Tuck invests an amount that gives him a 25% ownership interest.

The partnership agreement of Alix Gise and Bosco provides for the following income ratio: (a) Alix the managing partner receives a salary allowance of $108000 (b) each partner receives 15% interest on average capital investment and (c) remaining net income or loss is divided equally. The average capital investments for the year were: Alix $600000 Gise $1200000 and Bosco $1800000. If partnership net income is $720000 the amount distributed to Gise should be:

Salary allowances to partners are a major expense on most partnership income statements.

The partnership agreement of Alix Gise and Bosco provides for the following income ratio: (a) Alix the managing partner receives a salary allowance of $108000 (b) each partner receives 15% interest on average capital investment and (c) remaining net income or loss is divided equally. The average capital investments for the year were: Alix $600000 Gise $1200000 and Bosco $1800000. If partnership net income is $540000 the amount distributed to Alix should be

Encisco and Ollinger are partners who share profits and losses equally and have capital balances of $280000 and $245000 respectively. Parks is admitted into the partnership by investing $245000 for a 30% capital interest. The account balance of Ollinger Capital after the admission of Parks would be

On December 31 Nola Company has cash $30000 noncash assets $150000 and liabilities $80000. Capital balances were Harper $55000 and Kahle $45000. The firm is liquidated and the noncash assets are sold for $115000. Harper and Kahle share income in a 60:40 ratio. Instructions Prepare entries to record (a) the sale of noncash assets and (b) the allocation of the gain (loss) on liquidation to the partners.

When a partnership terminates business the sale of noncash assets is called

Total partners' equity of a partnership is equal to the sum of all partners' capital account balances.

In liquidation balances prior to the distribution of cash to the partners are: Cash $240000; Paley Capital $112000; Stengel Capital $104000 and King Capital $24000. The income ratio is 6:2:2 respectively. How much cash should be distributed to Paley?

The Felton and Burchell Partnership has partner capital account balances as follows: Felton, Capital \ 550,000 Burchell, Capital 200,000 The partners share income and losses in the ratio of 60% to Felton and 40% to Burchell. Instructions Prepare the journal entry on the books of the partnership to record the admission of Santos as a new partner under the following three independent circumstances. 1. Santos pays $400000 to Felton and $150000 to Burchell for one-half of each of their ownership interest in a personal transaction. 2. Santos invests $600000 in the partnership for a one-third interest in partnership capital. 3. Santos invests $240000 in the partnership for a one-third interest in partnership capital.

Partnership creditors may have a claim on the personal assets of any of the partners if the partnership assets are not sufficient to settle claims.

The partners' income and loss sharing ratio is 2:3:5 respectively. If the CHENARD JENNINGS and BLAIR Partnership is liquidated by selling the noncash assets for $375000 and creditors are paid in full what is the total amount of cash that CHENARD will receive in the distribution of cash to partners?

After liquidating noncash assets and paying creditors account balances in the Main Co. are Cash $29000 Art Capital (Cr.) $11000 Bob Capital (Cr) $8000 and Cam Capital (Cr.) $10000. The partners share income equally. Instructions Journalize the final distribution of cash to the partners.

Two proprietorships cannot combine and form a partnership.

Bagley invests personally owned equipment which originally cost $220000 and has accumulated depreciation of $60000 in the Bagley and Eggers partnership. Both partners agree that the fair value of the equipment was $120000. The entry made by the partnership to record Bagley's investment should be a. Equipment 220,000 Accumulated Depreciation-Equipment 60,000 Bagley, Capital 160,000 b. Equipment 160,000 Bagley, Capital 160,000 c. Equipment 120,000 Loss on Purchase of Equipment 40,000 Accumulated Depreciation-Equipment 60,000 Bagley, Capital 220,000 d. Equipment 120,000 Bagley, Capital 120,000

The ______________ ratio specifies the basis for sharing income and losses.

Each partner's initial investment in a partnership should be recorded at book value.