Exam 12: Accounting for Partnerships

Ms. Manchester, Mr. Robertson, and Ms. Allison formed a partnership with a 4:2:1 partnership on profit. Mr. Robertson will receive what percentage of the profit at the end of the year?

A bonus to a new partner

Three types of partnerships were described in the course. Explain how limited partnerships (LP) and limited liability partnerships (LLP) differ from each other and from a traditional partnership.

A partner pays income tax on the amount of money he or she withdrew from the partnership during the year.

In a limited liability partnership, all the partners have limited liability for the debts of the partnership.

Eaton and Fields sell 1/4 of their partnership interest to O'Reilly receiving $25,000 each. At the time of admission, Eaton and Fields each had a $45,000 capital balance. The admission of O'Reilly will cause the net partnership assets to

Each partner's initial non-cash investment in the partnership should be recorded at the

A partnership may be based on a handshake.

A bonus to a new partner will

In a limited partnership, the amount of debt that a partner is liable for is the amount of capital that they have contributed to the partnership.

The partners' profit and loss sharing ratio is 2:3:5, respectively. -If the D, E, and F Partnership is liquidated and the equipment is worthless, the creditors will look to what partner's personal assets for settlement of the creditors' claims?

When a partner exceeds his or her authority and the act looks appropriate for the partnership, the act is NOT binding on the other partners and the partnership.

All of the following are required to prepare a statement of partners' equity EXCEPT

When a partner withdraws from a partnership, asset revaluations should be recorded for the remaining assets in the partnership.

The partner in a limited partnership that has unlimited liability is referred to as the

Which of the following statements is INCORRECT regarding partnership agreements?

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

Baker, Gregg, and Stine share profit and losses in a ratio of 4:1:5 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 Stine under the following independent circumstances: a. The partners agree that Stine should be paid $70,000 by the partnership for his interest. b. The partners agree that Stine should be paid $45,000 by the partnership for his interest. c. Baker agrees to pay Stine $40,000 for one-half of his capital interest and Gregg agrees to pay Stine $40,000 for one-half of his capital interest in a personal transaction among the partners.

Jackie Thompson and Rick Chung are partners who share profit on a 3:2 basis, and on July 1, their capital account balances are $165,000 and $136,000 respectively. On July 1, Betty Lo is admitted to the partnership. Instructions Prepare the entry to record Betty's admission to the partnership under the following independent situations: a. Betty purchases 50% of Jackie's partnership interest from him for $115,000. b. Betty purchases a 1/3 interest in the partnership by contributing cash of $96,500. c. Betty purchases a 1/3 interest in the partnership by contributing cash of $167,900.

A capital deficiency exists when