Question 1

For what events or conditions should the Articles of Partnership make provision?

Accepted Answer

The Articles of Partnership should be a

Question 2

When the hybrid method is used to record the withdrawal of a partner, the partnership

Accepted Answer

A)  revalues assets and liabilities and records goodwill to the continuing partner but not to the withdrawing partner. 
B)  revalues liabilities but not assets, and no goodwill is recorded. 
C)  can recognize goodwill but does not revalue assets and liabilities. 
D)  revalues assets but not liabilities, and records goodwill to the continuing partner but not to the withdrawing partner. 
E)  revalues assets and liabilities but does not record goodwill. 
A)  revalues assets and liabilities and records goodwill to the continuing partner but not to the withdrawing partner. 
B)  revalues liabilities but not assets, and no goodwill is recorded. 
C)  can recognize goodwill but does not revalue assets and liabilities. 
D)  revalues assets but not liabilities, and records goodwill to the continuing partner but not to the withdrawing partner. 
E)  revalues assets and liabilities but does not record goodwill.

Question 3

P, L, and O are partners with capital balances of $50,000, $30,000 and $20,000 and who share in the profit and loss of the PLO partnership 30%, 20%, and 50%, respectively, when they agree to admit C for a 20% interest.
-If C is to contribute an amount equal to his book value share of the new partnership, how much should C contribute?

Accepted Answer

A)  $22,000 
B)  $20,000 
C)  $25,000 
D)  $18,000 
E)  $10,000 
A)  $22,000 
B)  $20,000 
C)  $25,000 
D)  $18,000 
E)  $10,000

Question 4

On January 1, 2011, Lamb and Mona LLP admitted Noris to a 20% interest in net assets for an investment of $50,000 cash. Prior to the admission of Noris, Lamb and Mona had net assets of $100,000 and an income-sharing ratio of 25% to Lamb and 75% to Mona. After the admission of Noris, the partnership contract included the following provisions:
Salary of $40,000 a year to Noris.
Remaining net income in ratio Lamb 20%, Mona 60%, Noris 20%
During the fiscal year ended December 31, 2011, the partnership had income of $90,000 prior to recognition of salary to Noris.
-James, Keller, and Rivers have the following capital balances; $48,000, $70,000 and $90,000 respectively. Because of a cash shortage James invests an additional $12,000 on June 1st. Each partner withdraws $1,000 per month. James, Keller, and Rivers receive a salary of $13,000, $15,000 and $20,000, respectively, for work done during the year. Each partner receives interest of 8% on their weighted average capital balance without regard to normal drawings. Any remaining profits are split 20%, 30%, and 50% respectively. The net income for the year is $30,000. What are the ending capital balances for each partner?

Accepted Answer

@#IMG-DLM& Remaining income (l

Question 5

The appropriate format of the December 31, 2010 closing entry for John & Hope Limited Liability Partnership, whose two partners had withdrawn their salaries from the partnership during the year is: $$\begin{array} { | l | l | r | r | } 
\hline \text { A) } & \text { John, Drawing } & \text { XXX } & \
\hline & \text { Hope, Drawing } & \text { XXX } & \
\hline & \text { Salaries Payable } & & \text { XXX } \
\hline \text { B) } & \text { Salaries Expense } & \text { XXX } & \
\hline & \text { John, Drawing } & & \text { XXX } \
\hline & \text { Hope, Drawing } & & \text { XXX } \
\hline \text { C) } & \text { John, Capital } & \text { XXX } & \
\hline & \text { Hope, Capital } & \text { XXX } & \
\hline & \text { Salaries Payable } & & \text { XXX } \
\hline \text { D) } & \text { John, Capital } & \text { XXX } & \
\hline & \text { Hope, Capital } & \text { XXX } & \
\hline & \text { John, Drawing } & & \text { XXX } \
\hline & \text { Hope, Drawing } & & \text { XXX } \
\hline
\end{array}$$

Accepted Answer

A)  A Above. 
B)  B Above. 
C)  C Above. 
D)  D Above. 
A)  A Above. 
B)  B Above. 
C)  C Above. 
D)  D Above.

Question 6

Cleary, Wasser, and Nolan formed a partnership on January 1, 2010, with investments of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed to (1) interest of 10% of the beginning capital balance each year, (2) annual compensation of $10,000 to Wasser, and (3) sharing the remainder of the income or loss in a ratio of 20% for Cleary, and 40% each for Wasser and Nolan. Net income was $150,000 in 2010 and $180,000 in 2011. Each partner withdrew $1,000 for personal use every month during 2010 and 2011.
-What was the total capital balance for the partnership at December 31, 2011??

Accepted Answer

A)  $852,000 
B)  $780,000 
C)  $708,000 
D)  $744,000 
E)  $594,000 
A)  $852,000 
B)  $780,000 
C)  $708,000 
D)  $744,000 
E)  $594,000

Question 7

P, L, and O are partners with capital balances of $50,000, $30,000 and $20,000 and who share in the profit and loss of the PLO partnership 30%, 20%, and 50%, respectively, when they agree to admit C for a 20% interest.
-If C contributes $40,000 to the partnership and the goodwill method is used, what amount will be debited for goodwill?

Accepted Answer

A)  $15,000 
B)  $20,000 
C)  $25,000 
D)  $28,000 
E)  $60,000 
A)  $15,000 
B)  $20,000 
C)  $25,000 
D)  $28,000 
E)  $60,000

Question 8

Cleary, Wasser, and Nolan formed a partnership on January 1, 2010, with investments of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed to (1) interest of 10% of the beginning capital balance each year, (2) annual compensation of $10,000 to Wasser, and (3) sharing the remainder of the income or loss in a ratio of 20% for Cleary, and 40% each for Wasser and Nolan. Net income was $150,000 in 2010 and $180,000 in 2011. Each partner withdrew $1,000 for personal use every month during 2010 and 2011.
-What was Wasser's total share of net income for 2010?

Accepted Answer

A)  $63,000. 
B)  $53,000. 
C)  $58,000. 
D)  $29,000. 
E)  $51,000. 
A)  $63,000. 
B)  $53,000. 
C)  $58,000. 
D)  $29,000. 
E)  $51,000.

Question 9

Cleary, Wasser, and Nolan formed a partnership on January 1, 2010, with investments of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed to (1) interest of 10% of the beginning capital balance each year, (2) annual compensation of $10,000 to Wasser, and (3) sharing the remainder of the income or loss in a ratio of 20% for Cleary, and 40% each for Wasser and Nolan. Net income was $150,000 in 2010 and $180,000 in 2011. Each partner withdrew $1,000 for personal use every month during 2010 and 2011.
-What was Cleary's capital account balance at the end of 2011?

Accepted Answer

A)  $163,420. 
B)  $151,420. 
C)  $139,420. 
D)  $100,000. 
E)  $142,000. 
A)  $163,420. 
B)  $151,420. 
C)  $139,420. 
D)  $100,000. 
E)  $142,000.

Question 10

Partnerships have alternative legal forms including all of the following except:

Accepted Answer

A)  General Partnership. 
B)  Limited Partnership. 
C)  Subchapter S Partnership. 
D)  Limited Liability Partnership. 
E)  Limited Liability Company. 
A)  General Partnership. 
B)  Limited Partnership. 
C)  Subchapter S Partnership. 
D)  Limited Liability Partnership. 
E)  Limited Liability Company.

Question 11

The partners of Apple, Bere, and Carroll LLP share net income and losses in a 5:3:2 ratio, respectively. The capital account balances on January 1, 2011, were as follows: $$\begin{array} { | l | r | } 
\hline \text { Apple, capital } & \$ 25,000 \
\hline \text { Bere, capital } & 75,000 \
\hline \text { Carroll, capital } & 50,000 \
\hline \text { Total partners' capital } & \$ 150,000 \
\hline
\end{array}$$
The carrying amounts of the assets and liabilities of the partnership are the same as their current fair values. Dorr will be admitted to the partnership with a 20% capital interest and a 20% share of net income and losses in exchange for a cash investment. The amount of cash that Dorr should invest in the partnership is:

Accepted Answer

A)  $25,000. 
B)  $30,000. 
C)  $37,500. 
D)  $75,000. 
E)  $90,000. ($150,000/.8 = $187,500. $187,500 - $150,000 = $37,500 to invest) 
A)  $25,000. 
B)  $30,000. 
C)  $37,500. 
D)  $75,000. 
E)  $90,000. ($150,000/.8 = $187,500. $187,500 - $150,000 = $37,500 to invest)

Question 12

Donald, Anne, and Todd have the following capital balances; $40,000, $50,000 and $30,000 respectively. The partners share profits and losses 20%, 40%, and 40% respectively.
-What is the total partnership capital after Anne retires receiving $80,000 and using the bonus method?

Accepted Answer

A)  $70,000. 
B)  $40,000. 
C)  $60,000. 
D)  $80,000. 
E)  $42,000. 
A)  $70,000. 
B)  $40,000. 
C)  $60,000. 
D)  $80,000. 
E)  $42,000.

Question 13

Which of the following is not a characteristic of a partnership?

Accepted Answer

A)  The partnership itself pays no income taxes. 
B)  It is easy to form a partnership. 
C)  Any partner can be held personally liable for all debts of the business. 
D)  A partnership requires written Articles of Partnership. 
E)  Each partner has the power to obligate the partnership for liabilities. 
A)  The partnership itself pays no income taxes. 
B)  It is easy to form a partnership. 
C)  Any partner can be held personally liable for all debts of the business. 
D)  A partnership requires written Articles of Partnership. 
E)  Each partner has the power to obligate the partnership for liabilities.

Question 14

P, L, and O are partners with capital balances of $50,000, $30,000 and $20,000 and who share in the profit and loss of the PLO partnership 30%, 20%, and 50%, respectively, when they agree to admit C for a 20% interest.
-C contributes $38,000 to the partnership and the bonus method is used. What amount will be credited for C's beginning capital balance?

Accepted Answer

A)  $20,000 
B)  $25,000 
C)  $27,600 
D)  $32,600 
E)  $38,000 
A)  $20,000 
B)  $25,000 
C)  $27,600 
D)  $32,600 
E)  $38,000

Question 15

Cleary, Wasser, and Nolan formed a partnership on January 1, 2010, with investments of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed to (1) interest of 10% of the beginning capital balance each year, (2) annual compensation of $10,000 to Wasser, and (3) sharing the remainder of the income or loss in a ratio of 20% for Cleary, and 40% each for Wasser and Nolan. Net income was $150,000 in 2010 and $180,000 in 2011. Each partner withdrew $1,000 for personal use every month during 2010 and 2011.
-What was Wasser's capital balance at the end of 2011?

Accepted Answer

A)  $201,000. 
B)  $263,520. 
C)  $264,540. 
D)  $304,040. 
E)  $313,780. 
A)  $201,000. 
B)  $263,520. 
C)  $264,540. 
D)  $304,040. 
E)  $313,780.

Question 16

Assume the partnership of Howell, Madrid, and Waldrop has been in existence for a number of years. Howell decides to withdraw from the partnership when the partners' capital balances are as follows: $$\begin{array} { | l | c | c | } 
\hline \text { Partner } & \begin{array} { l } 
\text { Capital } \
\text { Balance }
\end{array} & \begin{array} { l } 
\text { Profit and } \
\text { Loss Ratio }
\end{array} \
\hline \text { Howell } & \$ 60,000 & 4 \
\hline \text { Madrid } & 15,000 & 3 \
\hline \text { Waldrop } & 25,000 & 2 \
\hline
\end{array}$$ An appraisal of the business and its net assets estimates the fair value to be $154,000. Land with a book value of $20,000 has a fair value of $35,000. Howell has agreed to receive $84,000 in exchange for her partnership interest.
-Prepare the journal entries for the dissolution of Howell's partnership interest, assuming the goodwill method is to be applied.

Accepted Answer

The answer of Assume the partnership of Howell, Madrid, and...

Question 17

What is the dissolution of a partnership?

Accepted Answer

The dissolution of a partnersh

Question 18

Under what circumstances does a partner's balance in his or her capital account have practical consequences for the partner?

Accepted Answer

The most direct practical consequence of

Question 19

Cleary, Wasser, and Nolan formed a partnership on January 1, 2010, with investments of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed to (1) interest of 10% of the beginning capital balance each year, (2) annual compensation of $10,000 to Wasser, and (3) sharing the remainder of the income or loss in a ratio of 20% for Cleary, and 40% each for Wasser and Nolan. Net income was $150,000 in 2010 and $180,000 in 2011. Each partner withdrew $1,000 for personal use every month during 2010 and 2011.
-What was the total capital balance for the partnership at December 31, 2010?

Accepted Answer

A)  $600,000 
B)  $564,000 
C)  $535,000 
D)  $523,000 
E)  $545,000 
A)  $600,000 
B)  $564,000 
C)  $535,000 
D)  $523,000 
E)  $545,000

Question 20

Cleary, Wasser, and Nolan formed a partnership on January 1, 2010, with investments of $100,000, $150,000, and $200,000, respectively. For division of income, they agreed to (1) interest of 10% of the beginning capital balance each year, (2) annual compensation of $10,000 to Wasser, and (3) sharing the remainder of the income or loss in a ratio of 20% for Cleary, and 40% each for Wasser and Nolan. Net income was $150,000 in 2010 and $180,000 in 2011. Each partner withdrew $1,000 for personal use every month during 2010 and 2011.
-What was Nolan's capital balance at the end of 2010?

Accepted Answer

A)  $200,000. 
B)  $224,000. 
C)  $238,000. 
D)  $246,000. 
E)  $254,000. 
A)  $200,000. 
B)  $224,000. 
C)  $238,000. 
D)  $246,000. 
E)  $254,000.

For what events or conditions should the Articles of Partnership make provision?

When the hybrid method is used to record the withdrawal of a partner, the partnership

Partnerships have alternative legal forms including all of the following except:

Donald, Anne, and Todd have the following capital balances; $40,000, $50,000 and $30,000 respectively. The partners share profits and losses 20%, 40%, and 40% respectively. -What is the total partnership capital after Anne retires receiving $80,000 and using the bonus method?

Which of the following is not a characteristic of a partnership?

What is the dissolution of a partnership?

Under what circumstances does a partner's balance in his or her capital account have practical consequences for the partner?

The Equity Method of Accounting for Investments

Consolidation of Financial Information

Consolidations-Subsequent to the Date of Acquisition

Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements - Intra-Entity Asset Transactions

Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flo

Consolidated Financial Statements - Ownership Patterns and Income

Segment and Interim Reporting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Worldwide Accounting Diversity and International Standards

Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

Partnerships: Termination and Liquidation

Accounting for State and Local Governments

Accounting for State and Local Governments

Accounting and Reporting for Private Not-For-Profit Organizations

Accounting for Estates and Trusts

Filters

Exam 14: Partnerships: Formation and Operations

For what events or conditions should the Articles of Partnership make provision?

When the hybrid method is used to record the withdrawal of a partner, the partnership

Partnerships have alternative legal forms including all of the following except:

Donald, Anne, and Todd have the following capital balances; $40,000, $50,000 and $30,000 respectively. The partners share profits and losses 20%, 40%, and 40% respectively. -What is the total partnership capital after Anne retires receiving $80,000 and using the bonus method?

Which of the following is not a characteristic of a partnership?

What is the dissolution of a partnership?

Under what circumstances does a partner's balance in his or her capital account have practical consequences for the partner?

The Equity Method of Accounting for Investments

Consolidation of Financial Information

Consolidations-Subsequent to the Date of Acquisition

Consolidated Financial Statements and Outside Ownership

Consolidated Financial Statements - Intra-Entity Asset Transactions

Variable Interest Entities, Intra-Entity Debt, Consolidated Cash Flo

Consolidated Financial Statements - Ownership Patterns and Income

Segment and Interim Reporting

Foreign Currency Transactions and Hedging Foreign Exchange Risk

Translation of Foreign Currency Financial Statements

Worldwide Accounting Diversity and International Standards

Financial Reporting and the Securities and Exchange Commission

Accounting for Legal Reorganizations and Liquidations

Partnerships: Termination and Liquidation

Accounting for State and Local Governments

Accounting for State and Local Governments

Accounting and Reporting for Private Not-For-Profit Organizations

Accounting for Estates and Trusts

Filters