Exam 12: Accounting for Partnerships

If the partnership agreement specifies salaries to partners, interest on partners' capital, and the remainder on a fixed ratio, and partnership net income is not sufficient to cover both salaries and interest,

Diaz and Helms sell to Mayo a 1/3 interest in the Diaz-Helms partnership. Mayo will pay Diaz and Helms each $70,000 for admission into the organization. Before this transaction, Diaz and Helms show capital balances of $105,000 each. The journal entry to record the admission of Mayo will

The Dobler and Menke Partnership has partner capital account balances as follows: Dobler, Capital $550,000 Menke, Capital 250,000 The partners share income and losses in the ratio of 60% to Dobler and 40% to Menke. Instructions Prepare the journal entry on the books of the partnership to record the admission of Sloan as a new partner under the following three independent circumstances. 1. Sloan pays $350,000 to Dobler and $150,000 to Menke for one-half of each of their ownership interest in a personal transaction. 2. Sloan invests $850,000 in the partnership for a one-third interest in partnership capital. 3. Sloan invests $175,000 in the partnership for a one-third interest in partnership capital.

In the liquidation process, if a capital account shows a deficiency

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

The partners' drawing accounts are closed each period into the Income Summary account.

An income ratio based on ______________ balances may be appropriate when the amount of funds invested in the partnership is critical to the partnership.

A bonus to the remaining partners results when a retiring partner receives partnership assets which are less than his or her capital balance on the date of withdrawal.

In the liquidation of a partnership, any gain or loss on the realization of noncash assets should be allocated

Bob is investing in a partnership with Andy. Bob contributes as part of his initial investment, Accounts Receivable of $80,000; an Allowance for Doubtful Accounts of $12,000; and $8,000 cash. The entry that the partnership makes to record Bob's initial contribution includes a

The Uniform Partnership Act provides that

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

Jim Welch and Sam Thayer share partnership income on a 3:2 basis. They have capital balances of $560,000 and $280,000, respectively, when Bill Ryan is admitted to the partnership. Instructions Prepare the journal entry to record the admission of Ron Ryan under each of the following assumptions: (a) Ryan invests $340,000 for a 25% ownership interest. (b) Ryan invests $200,000 for a 25% ownership interest. (c) Ryan invests an amount that gives him a 25% ownership interest.

If a partner with a capital deficiency is unable to pay the amount owed to the partnership, the deficiency is allocated to the partners with credit balances

Which of the following is correct when admitting a new partner into an existing partnership?

Mel receives $210,000 and Norm receives $140,000 in a split of $350,000 net income. Which expression does not reflect the income splitting arrangement?

Which of the following statements is incorrect regarding partnership agreements?

Garr invests $20,000 in cash (admission by investment) in the Massey-Dix partnership to acquire a 1/4 interest. In this case

After liquidating noncash assets and paying creditors, account balances in the Main Co. are Cash $29,000, A Capital (Cr.) $11,000, B Capital (Cr,) $8,000 and C Capital (Cr.) $10,000. The partners share income equally. Instructions Journalize the final distribution of cash to the partners.

Mary Janane's capital statement reveals that her drawings during the year were $50,000. She made an additional capital investment of $25,000 and her share of the net loss for the year was $10,000. Her ending capital balance was $200,000. What was Mary Janane's beginning capital balance?