Exam 12: Partnerships

Simonsen, Paulson, and Richardson are partners in a firm with the following capital account balances: The profit-and-loss-sharing ratio among Simonsen, Paulson, and Richardson is 1:3:2, in the order given. Paulson is retiring from the partnership on December 31, 2013. Paulson is paid $250,000 cash in full compensation for her capital account balance. Which of the following is true of the journal entry prepared at the time of retirement?

When a partner withdraws her equity for cash, the corresponding capital account will be closed.

Mutual agency means that every partner can bind the business to a contract within the scope of its regular business operations.

Floyd and Merriam start a partnership business on June 12, 2019. Their capital account balances as of December 31, 2020 stood as follows: They agreed to admit Ramelow into the business for a one-third interest in the new partnership. He had to bring in a cash contribution of $20,000 for the same. Which of the following is the correct capital account balance of Ramelow after he enters the business?

Nancy and Betty enter into a partnership agreement whereby they undertake to share profits according to the following rules: (a)Nancy and Betty will receive a salary of $1,500 and $13,500 respectively. (b)The next allocation is based on 20% of the partner's capital balances. (c)Any remaining profit or loss is to be borne completely by Betty. The partnership's net income for the first year is $40,000. Nancy's capital balance is $90,000 and Betty's capital balance is $10,000 as at the end of the year. Calculate the share of profit/loss to be borne by Betty.

In a partnership, when a partner contributes a particular asset to the firm, he is considered the sole owner of the asset.

Simonsen, Paulson, and Richardson are partners in a firm with the following capital account balances: The profit-and-loss-sharing ratio among Simonsen, Paulson, and Richardson is 1:3:2, in the order given. Paulson is retiring from the partnership on December 31, 2013. Paulson's capital account is settled at book value. Journalize the cash payment to Paulson upon retirement.

A partnership is a business with two or more owners that is organized as a corporation.

Frank and Harry are partners. Frank has a capital balance of $50,000 and Harry has a capital balance of $40,000. Bill invested a building worth $30,000 to the partnership for an ownership interest of 20%. Calculate Bill's capital in the new partnership.

Which of the following statements is true of partnership?

Which of the following types of business organizations should pay business income tax?

Kenny and Jeff formed a partnership business. During the year, Kenny and Jeff withdrew $30,000 and $20,000, respectively. Which of the following will be included in the journal entry to record the withdrawals?

In a partnership, the income is taxed at the partnership level as well as at the personal level of the owners.

Rex and Sandy are partners. Rex has a capital balance of $350,000 and Sandy has a capital balance of $280,000. Marcus invests a building worth $210,000 to acquire interest in the new partnership. How much will be the partnership share of Marcus after he makes the investment? (Assume no bonus to any partner.)

Lauren and Elizabeth are partners. Lauren has a capital balance of $125,000 and Elizabeth has a capital balance of $110,000. Harry invested $100,000 to acquire an ownership interest of 30%. The journal entry to record the receipt of Harry's contribution will:

Bill and Bob share profits of their partnership firm in the ratio of 5:1. If the net income of the firm is $30,000, calculate the share of Bill's net income.

A(n)________ must carry large insurance policies to protect the public in case the partnership is found guilty of malpractice.

Which of the following is true of a partnership balance sheet?

In which of the following ways does a limited partnership differ from a general partnership?

Which of the following is true of a partnership balance sheet?