Question 1

William and Smith formed a partnership with Scott who contributed $100,000,William who contributed $30,000,and Smith who contributed $70,000.Their partnership agreement called for the earnings division to be based on the ratio of capital investments.If the partnership had a profit of $475,000 for its first year of operation,how much would be credited to Smith's capital account?

Accepted Answer

A) $166,250 
B) $70,000 
C) $130,000 
D) $345,000 
E) $475,000

Question 2

Discuss the accounting issues involved in the admission or withdrawal of a partner from a partnership.

Accepted Answer

The answer of Discuss the accounting issues involved in the...

Question 3

When the current market value of a partnership is greater than the recorded amounts of equity,the partners usually require the new partner to pay a bonus for joining.

Accepted Answer

A) True 
 B)False

Question 4

The partners of the Blue Tooth Partnership agree to liquidate.After all liabilities of $100,000 are paid,the capital account balances are: Wong,$80,000; Winslow,$70,000; and Peters,($4,000).Peters agrees to pay $4,000 in cash to settle his deficiency.Prepare the journal entries required to end the partnership.

Accepted Answer

The answer of The partners of the Blue Tooth Partnership...

Question 5

When a new partner is added to a partnership

Accepted Answer

A) The partnership ends. 
B) The underlying business ends. 
C) The underlying business continues. 
D) The partnership continues. 
E) The partnership ends,but the underlying business continues.

Question 6

Disadvantages of a partnership include

Accepted Answer

A) Limited life 
B) Mutual agency 
C) Unlimited liability 
D) Co-ownership of property 
E) All of these

Question 7

Explain the steps involved in the liquidation of a partnership.

Accepted Answer

The answer of Explain the steps involved in the liquidation...

Question 8

Matrix and Bentley invested $40,000 and $50,000,respectively,in a partnership they began one year ago.Assuming the partnership's profit was $140,000 for this year; calculate the share of the profit each partner should receive under the following assumptions.(1)The partnership agreement specifies a salary allowance of $25,000 to Matrix and $30,000 to Bentley,and the balance shared equally.(2)The partnership agreement specifies a salary allowance of $25,000 to Matrix and $30,000 to Bentley,10% interest on their investments,and the balance shared equally.

Accepted Answer

The answer of Matrix and Bentley invested $40,000 and $50,000,respectively,in...

Question 9

Phillip and Herbert formed a partnership.Phillip contributed $40,000 cash and accounts receivable worth $12,000.Herbert's investment included cash,$3,000; inventory,$10,000; and supplies,$4,000.(All values are current fair market values).Prepare the journal entry to record the formation of the partnership.

Accepted Answer

The answer of Phillip and Herbert formed a partnership.Phillip contributed...

Question 10

Moreau invested $18,000 and Fereday invested $32,000 in a partnership.They agreed to share incomes and losses by allowing a $9,000 per year salary allowance to Moreau and a $12,000 per year salary allowance to Fereday,plus interest on the partners' investments at 8%,with the balance to be shared equally.Under this agreement,the shares of the partners with a $80,000 profit are

Accepted Answer

A) $40,000 to Moreau; $40,000 to Fereday 
B) $18,000 to Moreau; $62,000 to Fereday 
C) $37,940 to Moreau; $42,060 to Fereday 
D) $39,940 to Moreau; $40,560 to Fereday 
E) $38,500 to Moreau; $41,500 to Fereday

Question 11

Yee,Young,and Kong form a partnership.Yee contributes $50,000 cash,Young contributes $10,000 in cash and equipment with and fair value of $32,000 and Kong contributes cash of $15,000.Prepare the journal entry to record the formation of the partnership.

Accepted Answer

The answer of Yee,Young,and Kong form a partnership.Yee contributes $50,000...

Question 12

If a partner is unable to cover a deficiency and the other partners absorb the deficiency,then that partner is thus relieved of all liability.

Accepted Answer

A) True 
 B)False

Question 13

Mutual agency means each partner can bind or commit the partnership to any contract within the scope of the partnership's business.

Accepted Answer

A) True 
 B)False

Question 14

A partnership is an unincorporated association of two or more people to pursue a business for profit as co-owners.

Accepted Answer

A) True 
 B)False

Question 15

The withdrawals account of each partner is

Accepted Answer

A) Credited when closed to his/her capital account 
B) Debited when closed to his/her capital account 
C) A permanent account and not closed 
D) Credited with his/her share of profit 
E) Debited with his/her share of losses

Question 16

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from acts of another partner is a

Accepted Answer

A) Partnership 
B) Limited partnership 
C) Limited liability partnership 
D) General partnership 
E) Limited liability company

Question 17

The partners of the Blue Tooth Partnership agree to liquidate.After all liabilities of $100,000 are paid,the capital account balances are: Wong,$80,000; Winslow,$70,000; and Peters,($4,000).Peters is unable to pay his capital deficiency.Assume the partners have no agreement for sharing profits and losses.Prepare the journal entries required to end the partnership.

Accepted Answer

The answer of The partners of the Blue Tooth Partnership...

Question 18

When a partner leaves a partnership,the withdrawing partner is entitled to a bonus if the recorded equity is overstated.

Accepted Answer

A) True 
 B)False

Question 19

Partnership accounting

Accepted Answer

A) Uses a capital account for each partner 
B) Uses a withdrawals account for each partner 
C) Allocates profit according to the partnership agreement 
D) Allocates losses according to the partnership agreement 
E) All of these

Question 20

When a partner leaves a partnership,the partnership ends,but the business can still continue to operate.

Accepted Answer

A) True 
 B)False

Exam 3: Partnerships

Discuss the accounting issues involved in the admission or withdrawal of a partner from a partnership.

When the current market value of a partnership is greater than the recorded amounts of equity,the partners usually require the new partner to pay a bonus for joining.

When a new partner is added to a partnership

Disadvantages of a partnership include

Explain the steps involved in the liquidation of a partnership.

Yee,Young,and Kong form a partnership.Yee contributes $50,000 cash,Young contributes $10,000 in cash and equipment with and fair value of $32,000 and Kong contributes cash of $15,000.Prepare the journal entry to record the formation of the partnership.

If a partner is unable to cover a deficiency and the other partners absorb the deficiency,then that partner is thus relieved of all liability.

Mutual agency means each partner can bind or commit the partnership to any contract within the scope of the partnership's business.

A partnership is an unincorporated association of two or more people to pursue a business for profit as co-owners.

The withdrawals account of each partner is

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from acts of another partner is a

When a partner leaves a partnership,the withdrawing partner is entitled to a bonus if the recorded equity is overstated.

Partnership accounting

When a partner leaves a partnership,the partnership ends,but the business can still continue to operate.