Exam 17: Partnership

The partnership of Smith and Jones,who have average capital balances of $11,000 and $19,000,respectively,earned $90,000 net income.Under each of the following independent situations,calculate the distribution of the $90,000. a)No agreement was established. b)Share based on their average capital balances.

The two types of allowances that may be considered before the division of profits and losses are:

Mary sold Jill her equity in the Mary and Jill partnership for $13,000.If both Mary and Jill had a $10,000 capital balance,the entry to record this transaction would be to:

The net income earned by the Cooper,Cross,and Crane partnership is $18,000.Their respective average capital balances are $20,000,$20,000,and $40,000.What is the closing entry to allocate the net income if no agreement was made for division of income?

Mary and Jeff entered into a partnership agreement.However,the agreement did not state how income and losses would be divided.The law states that income will be divided:

Cory,Brooke,and Amy share profits and losses in a 2:1:1 ratio,respectively,in their partnership.The assets are to be reduced $15,000 in value when Brooke wishes to leave the partnership.If each partner had a capital balance of $30,000 before Brooke's notification of withdrawal,what amount should Brooke be allowed to withdraw from the partnership?

Partners Brian,Josh,and Chad have average capital balances of $7,000,$3,000,and $90,000,respectively.Net income for the year is $12,000.Salary allowances are $14,000 for Brian and $5,000 for Josh.Chad gets 10% interest on his capital balance with the remainder being divided at a 1:1:2 ratio.What is Brian's capital balance after distributing the net income?

The partnership dissolves when a partner leaves.This characteristic is called:

Dows and Sands' partnership capital balances are $40,000 and $60,000,respectively.They share profits and losses in a 1:3 ratio,respectively.Davis is admitted to the partnership and invests $60,000 for a one-fourth interest,with a bonus to the old partners.Prepare the journal entry to admit Davis to the partnership.

David and Daniel formed a partnership.David invested $10,000,cash; Daniel invested $5,000 cash and equipment valued at $6,000.The proper entry to record this is to:

The income/loss agreement was ignored when closing the income summary and all income was distributed evenly.This error would cause:

Kate and Joe formed a partnership in 2012.Joe invested $60,000 and Kate invested $30,000.The partnership had $150,000 in income during 2012.There is no agreement as to how income is divided.Kate and Joe's share is:

Given the following accounts: [1] Cash [2] Accounts receivable [3] Allowance for doubtful accounts [4] Merchandise inventory [5] Store supplies [6] Store equipment [7] Accumulated depreciation [8] Notes payable [9] Accounts payable [10] Able Partner's Capital [11] Baker Partner's Capital [12] Able Partner's withdrawals [13] Baker Partner's withdrawals [14] Income summary [15] Service revenue [16] Gain on realization [17] Loss on realization Indicate the account(s) to be debited and credited to record the following transactions. -Closed the income summary to the partners' accounts with a net income. Debit ________ & ________ & ________ Credit ________ & ________ & ________

A partner may withdraw assets valued at more than book equity if:

Katie withdrew from the partnership of Katie,Courtney,and Nathan,and accepted $15,000 cash.Her capital balance was $18,000 and the difference will be shared in a ratio of 2:1.The entry would be to:

A cash withdrawal of a partner was recorded the same as paying payroll.This error would cause:

The agreed-upon ratio for dividing earnings or losses of a partnership is called:

A profit and loss ratio may not be based on capital contributions.

The basis on which profits and losses are shared is governed by:

Janie and Larry are partners,with beginning capital balances of $60,000 and $40,000 respectively.During the year,Janie withdrew $10,000 and Larry withdrew $15,000.The year's net income of $30,000 was distributed $10,000 to Janie and $20,000 to Larry.Calculate the ending balances in the capital accounts.