Question 1

MacArthur,Strong,and Viet form a partnership.MacArthur contributes $190,000 cash and Strong contributes $200,000 in cash.Viet contributes equipment worth $215,000.Prepare the single journal entry to record the formation of this partnership.

Accepted Answer

The answer of MacArthur,Strong,and Viet form a partnership.MacArthur contributes $190,000...

Question 2

A partnership agreement:

Accepted Answer

A)  Is not binding unless it is in writing. 
B)  Is the same as a limited liability partnership. 
C)  Is binding even if it is not in writing. 
D)  Does not generally address the issue of the rights and duties of the partners. 
E)  Is also called the articles of incorporation.

Question 3

Match each of the following terms with the appropriate definitions.
-A corporation that does not qualify for nor elect to be treated as a partnership for income tax purposes and therefore is subject to income taxes.

Accepted Answer

A) General partner 
B) Limited liability partnership 
C) Unlimited liability of partners 
D) C corporation 
E) Statement of partners' equity
F)Mutual agency
G)Limited partnership
H)S corporation
I)Partnership
J)Partnership contract

Question 4

Caroline Meeks and Charlie Fox decide to form a partnership on August 1.Meeks invests the following assets and liabilities in the new partnership:
 $$\begin{array} { l l } 
 & \text { Market Value } \
\text { Land } &  \$ 8 0 , 0 0 0 \
\text { Building }& 2 5 0 , 0 0 0  \
\text { Note payable } & 114,000
\end{array}$$  
The note payable is associated with the building and the partnership will assume responsibility for the loan.Fox invested $100,000 in cash and $95,000 in equipment in the new partnership.Prepare the journal entries to record the two partners' original investments in the new partnership.

Accepted Answer

The answer of Caroline Meeks and Charlie Fox decide to...

Question 5

Partners in a partnership are taxed on the partnership income,not the amounts they withdraw from the partnership.

Accepted Answer

A) True 
 B)False

Question 6

Match each of the following terms with the appropriate definitions.
-A partnership that has two classes of partners,limited partners and general partners.Limited partners have no personal liability beyond the amount they invest in the partnership,and have no active role except as specified in the partnership agreement.

Accepted Answer

A) General partner 
B) Limited liability partnership 
C) Unlimited liability of partners 
D) C corporation 
E) Statement of partners' equity
F)Mutual agency
G)Limited partnership
H)S corporation
I)Partnership
J)Partnership contract

Question 7

If partners agree on how to share income,but say nothing about losses,then losses are shared ________.

Accepted Answer

The answer of If partners agree on how to share...

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

On May 1,Gosworth and Jordan formed a partnership.Gosworth contributed cash of $100,000 and equipment valued at $142,000.Jordan contributed land valued at $130,000 and a building valued at $250,000.The partnership also assumed responsibility for Jordan's $120,000 long-term note payable associated with the land and building.The partners agreed to share income as follows: Gosworth is to receive a salary allowance of $38,000,both are to receive an annual interest allowance of 8% of their beginning-year capital investments,and any remaining income or loss is to be shared equally.During the year,Gosworth withdrew $40,000 and Jordan withdrew $42,000 cash.After the adjusting and closing entries are made to the revenue and expense accounts at the end of the year,the Income Summary account had a credit balance of $140,000.Prepare the journal entries to record (a)the partners' initial capital investments, (b)their cash withdrawals,and (c)closing of both the Withdrawals and Income Summary accounts.

Accepted Answer

The answer of On May 1,Gosworth and Jordan formed a...

Question 10

Accounting procedures for both C corporations and S corporations are the same in all aspects.

Accepted Answer

A) True 
 B)False

Question 11

Forman and Berry are forming a partnership.Forman will invest a building that currently is being used by another business owned by Forman.The building has a market value of $80,000.Also,the partnership will assume responsibility for a $20,000 note secured by a mortgage on that building.Berry will invest $50,000 cash.For the partnership,the amounts to be recorded for the building and for Forman's Capital account are:

Accepted Answer

A)  Building, $80,000 and Forman, Capital, $80,000. 
B)  Building, $60,000 and Forman, Capital, $60,000. 
C)  Building, $60,000 and Forman, Capital, $50,000. 
D)  Building, $80,000 and Forman, Capital, $60,000. 
E)  Building, $60,000 and Forman, Capital, $80,000.

Question 12

Mace and Bowen are partners and share equally in income or loss.Mace's current capital balance is $135,000 and Bowen's is $120,000.Mace and Bowen agree to accept Kent with a 30% interest in the partnership.Kent invests $115,000 in the partnership.
-The amount credited to Kent's capital account is:

Accepted Answer

A)  $111,000. 
B)  $115,000. 
C)  $92,500. 
D)  $120,000. 
E)  $119,000.

Question 13

Palmer withdraws from the FAP Partnership.The remaining partners agree to buy out her share for her capital balance of $65,000.Prepare the journal entry to record the withdrawal from the partnership.

Accepted Answer

The answer of Palmer withdraws from the FAP Partnership.The remaining...

Question 14

Peters and Chong are partners and share equally in income or loss.Peters' current capital balance is $140,000 and Chong's is $130,000.Peters and Chong agree to accept Aaron with a 30% interest in the partnership.Aaron invests $98,000 in the partnership.
-The balances in Peters's and Chong's capital accounts after admission of the new partner equal:

Accepted Answer

A)  Peters $140,000; Chong $130,000. 
B)  Peters $146,200; Chong $136,200. 
C)  Peters $145,000; Chong $135,000. 
D)  Peters $133,800; Chong $123,800. 
E)  Peters $166,027; Chong $156,027.

Question 15

Wallace and Simpson formed a partnership with Wallace contributing $60,000 and Simpson contributing $40,000.Their partnership agreement calls for the income (loss)division to be based on the ratio of capital investments.
-The partnership had income of $150,000 for its first year of operation.When the Income Summary is closed,the journal entry to allocate partner income is:

Accepted Answer

A)  Debit Income Summary $150,000; credit Wallace, Capital $75,000; credit Simpson, Capital $75,000. 
B)  Debit Wallace, Capital $75,000; debit Simpson, Capital $75,000; credit Income Summary $150,000. 
C)  Debit Income Summary $150,000; credit Wallace, Capital $90,000; credit Simpson, Capital $60,000. 
D)  Debit Cash $150,000; credit Wallace, Capital $90,000; credit Simpson, Capital $60,000. 
E)  Debit Wallace, Capital $90,000; debit Simpson, Capital $60,000; credit Cash $150,000.

Question 16

Fallon and Springer formed a partnership on January 1.Fallon contributed $90,000 cash and equipment with a market value of $60,000.Springer's investment consisted of: cash,$30,000; inventory,$20,000; all at market values.Partnership net income for Year 1 and Year 2 was $75,000 and $120,000,respectively.
1.Determine each partner's share of the net income for each year,assuming each of the following independent situations:
(a)Income is divided based on the partners' failure to sign an agreement.
(b)Income is divided based on a 2:1 ratio (Fallon: Springer).
(c)Income is divided based on the ratio of the partners' original capital investments.
(d)Income is divided based on interest allowance of 12% on the original capital investments; salary allowance to Fallon of $30,000 and Springer of $25,000; and the remainder to be divided equally.
2.Prepare the journal entry to record the allocation of the Year 1 income under alternative (d)above.

Accepted Answer

The answer of Fallon and Springer formed a partnership on...

Question 17

Caitlin,Chris,and Molly are partners and share income and losses in a 3:4:3 ratio.The partnership's capital balances are Caitlin,$120,000; Chris,$80,000; and Molly,$100,000.Paul is admitted to the partnership on July 1 with a 20% equity and invests $60,000.
-The balance in Caitlin's capital account immediately after Paul's admission is:

Accepted Answer

A)  $120,000 
B)  $116,400 
C)  $123,600 
D)  $72,000 
E)  $60,000

Question 18

Dalworth and Minor have decided to form a partnership.Minor is going to contribute a depreciable asset to the partnership as her equity contribution to the partnership.The following information regarding the asset to be contributed by Minor is available:

Based on this information,Minor's beginning equity balance in the partnership will be:

Accepted Answer

A)  $276,000 
B)  $158,000 
C)  $136,000 
D)  $127,000 
E)  $18,000

Question 19

Match each of the following terms with the appropriate definitions.
-The agreement between partners that sets terms under which the affairs of the partnership are conducted.

Accepted Answer

A) General partner 
B) Limited liability partnership 
C) Unlimited liability of partners 
D) C corporation 
E) Statement of partners' equity
F)Mutual agency
G)Limited partnership
H)S corporation
I)Partnership
J)Partnership contract

Question 20

Caitlin,Chris,and Molly are partners and share income and losses in a 3:4:3 ratio.The partnership's capital balances are Caitlin,$120,000; Chris,$80,000; and Molly,$100,000.Paul is admitted to the partnership on July 1 with a 20% equity and invests $160,000.
-The balance in Paul's capital account immediately after his admission is:

Accepted Answer

A)  $160,000 
B)  $460,000 
C)  $92,000 
D)  $68,000 
E)  $300,000

Exam 16: Partnership Accounting

MacArthur,Strong,and Viet form a partnership.MacArthur contributes $190,000 cash and Strong contributes $200,000 in cash.Viet contributes equipment worth $215,000.Prepare the single journal entry to record the formation of this partnership.

A partnership agreement:

Match each of the following terms with the appropriate definitions. -A corporation that does not qualify for nor elect to be treated as a partnership for income tax purposes and therefore is subject to income taxes.

Partners in a partnership are taxed on the partnership income,not the amounts they withdraw from the partnership.

If partners agree on how to share income,but say nothing about losses,then losses are shared ________.

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

Accounting procedures for both C corporations and S corporations are the same in all aspects.

Mace and Bowen are partners and share equally in income or loss.Mace's current capital balance is $135,000 and Bowen's is $120,000.Mace and Bowen agree to accept Kent with a 30% interest in the partnership.Kent invests $115,000 in the partnership. -The amount credited to Kent's capital account is:

Palmer withdraws from the FAP Partnership.The remaining partners agree to buy out her share for her capital balance of $65,000.Prepare the journal entry to record the withdrawal from the partnership.

Match each of the following terms with the appropriate definitions. -The agreement between partners that sets terms under which the affairs of the partnership are conducted.