Exam 16: Partnerships - Formation,operations,and Changes in Ownership Interests

A summary balance sheet for the Ash,Brown,and Curly partnership on December 31,2014 is shown below.Partners Ash,Brown,and Curly allocate profit and loss in their respective ratios of 2:1:1.The partnership agreed to pay partner Brown $135,000 for his partnership interest upon his retirement from the partnership on January 1,2015.The partnership financials on January 1,2015 are: Assets Equities Required: Prepare the journal entry to reflect Brown's retirement from the partnership: 1.Assuming a bonus to Brown. 2.Assuming a revaluation of total partnership capital based on excess payment. 3.Assuming goodwill equal to the excess payment is recorded.

Use the following information to answer the question(s) below. Alfred and Barne share profits and losses in a ratio of 2:3, respectively, after salary allowances, interest allowances and bonus allocations. Alfred and Barne receive salary allowances of $30,000 and $60,000, respectively, and both partners receive 10% interest based upon the balance in their capital accounts on January 1. Partners' drawings are not used in determining the average capital balances. Total net income for 2014 is $180,000. If net income after deducting the interest and salary allocations is more than $60,000, Barne receives a bonus of 5% of the original amount of net income. -If the partnership experiences a net loss of $60,000 for the year,what will be the final net amount of profit or (loss)closed to each partner's capital account?

The profit and loss sharing agreement for the Tuttle,Upman,and Veer partnership provides for residual profits and losses to be allocated 2:3:6 to Tuttle,Upman,and Veer,respectively.In 2014,the partnership recorded $11,000 of net income that was properly allocated to the partners' capital accounts.On January 18,2015,after the books were closed for 2014,Tuttle discovered that the $16,500 payment for the partnership's liability and workers compensation insurance for 2015 was recorded as insurance expense when it was paid on December 28,2014. Required: Prepare the necessary correcting entry(s)for the partnership.

Use the following information to answer the question(s) below. Quincy has decided to retire from the partnership of Quincy, Robert, and Sam. The partnership will pay Quincy $400,000. Total partnership capital should be revalued based on the excess payment to Quincy. (Assume the book values of the assets listed below equals fair values.) A summary balance sheet for the Quincy, Robert, and Sam partnership appears below. Quincy, Robert, and Sam share profits and losses in a ratio of 1:1:3, respectively. -What partnership capital will Robert have after Quincy retires?

In the Uniform Partnership Act,partners have

When a new partner joins the partnership,the old partnership is dissolved,the books are closed and a new partnership agreement is established.

A summary balance sheet for the Akerly,Baskin,and Crow partnership on December 31,2014 is shown below.Partners Akerly,Baskin,and Crow allocate profit and loss in their respective ratios of 3:2:1.The partnership agreed to pay partner Baskin $500,000 for his partnership interest upon his retirement from the partnership on January 1,2015.The partnership financials on January 1,2015 are: Assets Equities Required: Prepare the journal entry to reflect Baskin's retirement from the partnership: 1.Assuming a bonus to Baskin. 2.Assuming a revaluation of total partnership capital based on excess payment. 3.Assuming goodwill equal to the excess payment is recorded.

Use the following information to answer the question(s) below. Bertram and Ernest share profits and losses equally after salary and interest allowances. Bertram and Ernest receive salary allowances of $40,000 and $60,000, respectively, and both partners receive 10% interest on their average capital balances. Average capital balances are calculated at the beginning of each month, regardless of when additional capital contributions or permanent withdrawals are made subsequently within the month. Partners' drawings of $3,000 per month are not used in determining the average capital balances. Total net income for 2014 is $240,000. Permanent withdrawals of capital: Additional investments of capital: -What is the weighted-average capital for Bertram and Ernest in 2014?

The profit and loss sharing agreement for the Jill,Kelly,and Lila partnership provides that each partner receives a bonus of 5% on the original amount of partnership net income if net income is above $25,000.Jill and Kelly receive a salary allowance of $7,500 and $10,500,respectively.Lila has an average capital balance of $260,000,and receives a 10% interest allocation on the amount by which her average capital account balance exceeds $200,000.Residual profits and losses are allocated to Jill,Kelly,and Lila in their respective ratios of 7:5:8. Required: Prepare a schedule to allocate $88,000 of partnership net income to the partners.

Greta,Harriet,and Ivy have a retail partnership business selling personal computers.The partners are allowed an interest allocation of 6% on their average capital.Capital account balances on the first day of each month are used in determining weighted average capital,regardless of additional partner investment or withdrawal transactions during any given month.Withdrawals of capital that are debited to the capital account are used in the average calculation.Partner capital activity for the year was: Required: Calculate weighted average capital for each partner,and determine the amount of interest that each partner will be allocated.Round all calculations to the nearest whole dollar.