Exam 12: Partnerships

Gary,Peter,and Chris own a firm as partners.Gary has a capital balance of $22,000;Peter a capital balance of $42,000;and Chris has a capital balance of $32,000.As per the partnership agreement,Gary gets a profit share of 2/9;Peter has 4/9;and Chris has 3/9.Which of the following is true,if Gary withdraws from the partnership by receiving $22,000?

Farrell and Jimmy enter into a partnership agreement on May 1,2017.Farrell contributes $30,000 and Jimmy contributes $140,000 as their capital contributions.They decide to share profits and losses in the ratio of their respective capital account balances.The net income for the year ended December 31,2017 is $40,000.Which of the following amounts should be credited to Jimmy's capital account?

Liquidation in a partnership refers to ________.

In a general partnership,the partners have unlimited personal liability for the debts of the business.

How is the accounting equation affected when a partner withdraws cash?

Gary,Peter,and Chris and have capital balances of $26,000,$38,000,and $30,000,respectively.As per the partnership agreement,Gary gets a profit share of 2/9;Peter gets 4/9;and Chris gets 3/9.The partnership agrees to pay $20,000 as the final settlement to Gary.How much bonus does Peter receive as a result of this transaction?

Keith and Jim are partners.Keith has a capital balance of $49,000 and Jim has a capital balance of $38,000.Bill invested $33,000 to acquire an ownership interest of 30%.Which of the following statements is true of this transaction?

Which of the following is true of capital deficiency in the liquidation of a partnership?

Which of the following is a characteristic of a partnership?

The balance sheet of Incrad Clothes,LLC,as of December 31,2017 is presented below. Which of the following statements is true regarding Incrad's balance sheet?

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

When a partner withdraws his or her partnership interest for cash,the liabilities in the balance sheet remain unchanged.

Which of the following is true of ownership changes in a partnership?

While liquidating a partnership,the cash remaining after paying all liabilities is paid to the partners based on their profit-and-loss-sharing agreement.

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-fifth interest in the new partnership.Ramelow contributes $27,000 cash in exchange for the partnership interest.Assume that Floyd and Merriam shared profits and losses in a 3:1 ratio before the admission of Ramelow.Which of the following is the correct journal entry to record the above admission?

When an existing partner sells his interest to another party in a personal transaction ________.

In a partnership,the entry to close net loss ________.

In a partnership,a person can become a partner by purchasing an existing partner's interest.

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 salaries of $12,500 and $24,500 respectively as the first allocation. (b)The next allocation is based on 20% of each partner's capital balances. (c)Any remaining profit or loss is to be allocated completely to Betty. The partnership's net loss for the first year is $30,000.Nancy's capital balance is $107,000 and Betty's capital balance is $11,000 as at the end of the year.Calculate the share of profit (loss)to be allocated to Nancy.

When a new partner is admitted at a higher-than-book-value contribution,the existing partners will receive a bonus amount.