Exam 12: Accounting for Partnerships

When a new partner is admitted,it will dissolve the old partnership.

There is an impact on the income statement (gain or loss)of a partnership when a partner withdraws from the business.

In a liquidation,one partner may have to make up the deficit in another partner's account.

The most appropriate place to look for relationships among partners is in the

Brandi and Hunter divide partnership income and losses solely on the basis of their average capital balances.Brandi had $90,000 invested during all of 20x5; Hunter had $60,000 invested from January 1 to September 30,and he invested another $40,000 on October 1.If income was $400,000 during 20x5,how much should each partner receive?

Alex,Clinton,and Evan are in a partnership.Evan decides to withdraw from the partnership by selling his interest to Linsey.Alex and Clinton agree to this.Alex's Capital account and Clinton's Capital account

When M purchases N's $10,000 capital interest for $10,000,the ensuing entry on the books of the partnership would contain a debit to Cash for $10,000.

Which of the following is incorrect regarding partnerships?

The use of salaries in the allocation of income or loss allows for the differences in the services that partners provide the business.

Liabilities related to assets invested in a partnership by a new partner can be transferred to the partnership.

On December 31,20x5,the X&Y Partnership had the following assets,liabilities,and partners' equity: When the partners agreed to liquidate the business,the assets were sold for $160,000 and the liabilities were paid.X and Y share profits and losses in a ratio of 3:1,respectively.What is the final cash distribution to each partner after liquidation?

As long as the action is within the scope of the partnership,any partner can bind the partnership.

The entities forming joint ventures usually involve companies,but can sometimes involve governments.

When a new partner is admitted,the old partnership agreement is still in effect.

Joint ventures

Partners' Withdrawals accounts have normal debit balances.

Each partner is personally liable only for his/her share of the debts of the partnership.

When a partner withdraws from a partnership taking assets that represent less than his or her capital balance,

Paul,Quinn,and Ralph have equities in a partnership of $120,000,$180,000,and $100,000,respectively,and share income and losses in a ratio of 2:1:2,respectively.The partners have agreed to admit Sandy to the partnership.Prepare entries in journal form without explanations to record the admission of Sandy to the partnership under each of the following assumptions: a.Sandy invests $100,000 for a 30 percent interest,and a bonus is recorded for Sandy. b.Sandy invests $150,000 for a one-fifth interest,and a bonus is recorded for the old partners.

Gains and losses on the sale of assets in a liquidation are divided among partners according to the stated ratios.