Exam 19: Accounting for Partnerships

Net income for the Gifts Galore for the year ended December 31, 2019, was $18,000. The partners, Chang and Jennings, share profits in the ratio of 70/30, respectively. 1. How much of the net income will be allocated to Chang? 2. How much of the net income will be allocated to Jennings?

Which of the following statements is correct?

Nancy Conradt and Chris Russell are partners who share profits and losses in the ratio of 60:40, respectively. On December 31, 2019, they decide that Russell will sell one-half of his interest to Pam Ortega. At that time, the balances of the capital accounts are $500,000 for Conradt and $700,000 for Russell. The partners agree that before the new partner is admitted, certain assets should be revalued. These assets include merchandise inventory carried at $411,200 revalued at $403,600, and a building with a book value of $260,000 revalued at $450,000. On page 10 of a general journal, record the revaluation entries. Omit descriptions. Then, determine the capital balances of the two existing partners after the revaluation is made.

If plant equipment is transferred from a sole proprietorship to a partnership, the related--------------accounts start with zero balances in the partnership records.

The Articles of Organization are the legal agreement of the partnership that specifies the names of partners, the name, location and nature of the partnership business; the starting date and life of the partnership as well as the rights and duties of each partner.

When a partner makes a cash withdrawal that is intended to be a permanent reduction in his/her investment, the withdrawal account is debited.

A pool of talented professionals can form as a Not-for-Profit partnership and provide needed community services.

A partnership recorded the following journal entry: This entry reflects:

The statement of partners' equities summarizes the changes in the partners'----------- accounts during the accounting period.

On November 1, Jackson and Kiln formed a partnership with Jackson contributing land valued at $180,000 and a building valued at $265,000. Kiln contributed $195,000 in cash. The partnership assumed the mortgage on Jackson's property of $130,000. Profits and losses are to be shared equally. What are the balances of the partner's capital accounts after recording these transactions?

The amount that each partner withdraws from a partnership

The entry to record the investment of cash in a partnership by one of the partners would consist of

Catherine Vollick and Danica Hubbard are partners. To expand the expertise of their business, they have agreed to admit Kyle Simon to the partnership on January 1, 2019. The capital account balances on January 1, 2019, after revaluation of assets, are Vollick, $80,000, and Hubbard, $60,000. Net income or net loss is shared equally. On page 8 of a general journal, record the admission of Simon to the partnership on January 1, 2019, assuming that Vollick sells one-half of her interest to Simon for $50,000 in cash. Omit the description.

Net income for Costmore Sales for the year ended December 31, 2019, was $86,000. The partners, Johnson and Lindstrom, share profits in the ratio of 60/40, respectively. The balance in Johnson's capital account is $60,000. The balance in Lindstrom's capital account is $60,000. 1. How much of the net income will be allocated to Johnson? 2. How much of the net income will be allocated to Lindstrom?

A partnership has a(n)----------life because it ends with the death or withdrawal of any partner.

When a partner submits personal living expenses for company reimbursement and the expense is reflected as a reduction of period profits, the company has violated the

Explain the major advantages and disadvantages of the partnership form.

A dissolution has little impact on the business activities of the partnership whereas a liquidation occurs when the business ceases to exist.

The entry to record the equal distribution of net income between two partners consists of

Robert Ballard, a sole proprietor, entered into partnership with another individual. Ballard's investment in the partnership included equipment that cost $64,000 when it was purchased. The equipment has a book value of $36,000 and a net agreed-on value of $40,000. In the financial records of the partnership, this equipment and its accumulated depreciation should be recorded at