Question 1

The partners' income and loss sharing ratio is 2:3:5, respectively.  If the Cindi, Jenni, and Becki Partnership is liquidated and the noncash assets are worthless, the creditors will look to what partner's personal assets for settlement of the creditors' claims?

Accepted Answer

A)  The personal assets of Partner Jenni. 
B)  The personal assets of Partners Cindi and Becki. 
C)  The personal assets of Partners Cindi, Jenni, and Becki. 
D)  The personal assets of the partners are not available for partnership debts.

Question 2

Decker and Mader have a partnership agreement which includes the following provisions regarding sharing net income or net loss:
1. A salary allowance of $54,000 to Decker and $36,000 to Mader.
2. An interest allowance of 10% on capital balances at the beginning of the year.
3. The remainder to be divided 60% to Decker and 40% to Mader.
The capital balance on January 1, 2010, for Decker and Mader was $90,000 and $120,000, respectively. During 2010, the Decker and Mader Partnership had sales of $495,000, cost of goods sold of $290,000, and operating expenses of $75,000.
Instructions
Prepare an income statement for the Decker and Mader Partnership for the year ended December 31, 2010. As a part of the income statement, include a Division of Net Income to each of the partners.

Accepted Answer

The answer of Decker and Mader have a partnership agreement...

Question 3

Baker and Mays each sell 1/3 of their partnership interest to Pool, receiving $140,000 each. At the time of the admission, each partner has a $420,000 capital balance. The entry to record the admission of Pool will show a

Accepted Answer

A)  debit to Cash for $280,000. 
B)  credit to Pool, Capital for $420,000. 
C)  debit to Mays, Capital for $420,000. 
D)  debit to Baker, Capital for $140,000.

Question 4

Gore and Dean share partnership profits and losses in the ratio of 6:4. Gore's Capital account balance is $320,000 and Dean's Capital account balance is $200,000. Naylor is admitted to the partnership by investing $360,000 and is to receive a one-fourth ownership interest. Gore, Dean and Naylor's capital balances after Naylor's investment will be

Accepted Answer

The answer of Gore and Dean share partnership profits and...

Question 5

The largest companies in the United States are primarily organized as

Accepted Answer

A)  limited partnerships. 
B)  partnerships. 
C)  corporations. 
D)  proprietorships.

Question 6

Each of the following is used in preparing the partners' capital statement except the

Accepted Answer

A)  balance sheet. 
B)  income statement. 
C)  partners' capital accounts. 
D)  partners' drawing accounts.

Question 7

The balance sheet of a partnership will

Accepted Answer

A)  report retained earnings below the partnership capital accounts. 
B)  show a separate capital account for each partner. 
C)  show a separate drawing account for each partner. 
D)  show the amount of income that was distributed to each partner.

Question 8

A major disadvantage of the partnership form of organization is ______________, which makes each partner personally and individually liable for all partnership liabilities.

Accepted Answer

The answer of A major disadvantage of the partnership form...

Question 9

If a bonus is given to a new partner, the old partners' capital accounts are decreased based on their ______________ ratio prior to the admission of the new partner.

Accepted Answer

The answer of If a bonus is given to a...

Question 10

Which of the following would not be recorded in the entry for the formation of a partnership?

Accepted Answer

A)  Accumulated depreciation 
B)  Allowance for doubtful accounts 
C)  Accounts receivable 
D)  All of these would be recorded.

Exam 12: Accounting for Partnerships

The partners' income and loss sharing ratio is 2:3:5, respectively. If the Cindi, Jenni, and Becki Partnership is liquidated and the noncash assets are worthless, the creditors will look to what partner's personal assets for settlement of the creditors' claims?