Exam 12: Accounting for Partnerships

Each partner has a separate Capital,Withdrawals,and Income or Loss account.

Juan invests $120,000 for a one-fifth interest in a partnership in which the other partners have capital totaling $240,000 before admitting Juan.After distribution of the bonus,Juan's capital is

A partnership agreement should include

Erin,Rachel,and Travis are partners in ERT Company,with average capital balances for the year of $60,000,$80,000,and $40,000,respectively.They share remaining income and losses in a 2:5:3 ratio,respectively,after each receives a $30,000 salary and 10 percent interest on his or her average capital balance.In the journal provided,prepare the entries without explanations to close income or loss into their Capital accounts,assuming (a)net income of $148,000,(b)net income of $28,000,and (c)net loss of $12,000.

Cortney invests $80,000 for a 10 percent interest in a partnership that has total capital of $600,000 after admitting Cortney.Which of the following is true?

The salary allocation to partners also appears as Salaries Expense on the partnership income statement.

Anne,Barb,and Cathy are partners who share profits and losses in a ratio of 3:1:2,respectively.Cathy's Capital account has a $100,000 balance.Anne and Barb have agreed to let Cathy take $124,000 of the company's cash when she retires.Prepare an entry in journal form without explanation to record Cathy's exit,including the recognition of a bonus to Cathy.

Accounting for a partnership comes closer to accounting for a corporation than to accounting for a sole proprietorship.

A partnership is an accounting entity separate and apart from its owners.

Austin invests $80,000 for a 20 percent interest in a partnership that has capital totaling $300,000 after admitting Austin.Which of the following is true?

Which of the following partnership characteristics is an advantage?

If the partnership agreement does not describe the method of income and loss distribution,the partners must share income and losses equally.

A new partner must have the consent of all the partners before being admitted into the partnership.

If a partnership agreement does not specify how income and losses are to be distributed,the partners share them equally.

In a partnership liquidation,

Briyanna and Greg form a partnership and invest the following assets and liabilities.Greg's building is subject to a $40,000 mortgage that is not assumed by the partnership. In the journal provided prepare the entry to record the formation of the partnership.(Omit explanation.)

There are several types of business organizations that mimic the characteristics of a partnership.Describe two of these business organizations.

Under the partnership form of business,it may be difficult to raise large amounts of capital.

When a partner leaves a partnership,it is possible that total assets will be unaffected.

In a limited partnership