Question 1

Aaron and Kim form a partnership by combining the assets of their separate businesses. Aaron contributes accounts receivable with a face amount of $50,000 and equipment with a cost of $180,000 and accumulated depreciation of $100,000. The partners agree that the equipment is to be priced at $68,000, that $3,500 of the accounts receivable are completely worthless and are not to be accepted by the partnership, and that $2,000 is a reasonable allowance for the uncollectibility of the remaining accounts receivable. Kim contributes cash of $21,000 and merchandise inventory of $44,500. The partners agree that the merchandise inventory is to be priced at $48,000. Journalize the entries to record in the partnership accounts (a) Aaron's investment and (b) Kim's investment.

Accepted Answer

The answer of Aaron and Kim form a partnership by...

Question 2

Partners Ken and Macki each have a $40,000 capital balance and share income and losses in a 3:2. Cash equals $20,000, noncash assets equal $120,000, and liabilities equal $60,000. If the noncash assets are sold for $80,000, the Macki's capital account will

Accepted Answer

A)  decrease by $16,000. 
B)  decrease by $24,000. 
C)  increase by $24,000. 
D)  decrease by $40,000.

Question 3

The salary allocation to partners used in dividing net income would also appear as salary expense on the partnership income statement.

Accepted Answer

A) True 
 B)False

Question 4

Alpha and Beta are partners who share income in the ratio of 1:2 and have capital balances of $40,000 and $70,000 at the time they decide to terminate the partnership. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $50,000. What amount of loss on realization should be allocated to Alpha?

Accepted Answer

A)  $60,000 
B)  $20,000 
C)  $30,000 
D)  $50,000

Question 5

As part of the initial investment, a partner contributes equipment that had originally cost $125,000 and on which accumulated depreciation of $100,000 has been recorded. If similar equipment would cost $150,000 to replace and the partners agree on a valuation of $38,000 for the contributed equipment, what amount should be debited to the equipment account?

Accepted Answer

A)  $38,000 
B)  $150,000 
C)  $125,000 
D)  $100,000

Question 6

Watson purchased one-half of Dalton's interest in the Patton and Dalton partnership for $45,000. Prior to the investment, land was revalued to a market value of $135,000 from a book value of $93,000. Patton and Dalton share net income equally. Dalton had a capital balance of $35,000 prior to these transactions.
Required:
a. Provide the journal entry for the revaluation of land.
b. Provide the journal entry to admit Watson.

Accepted Answer

The answer of Watson purchased one-half of Dalton's interest in...

Question 7

Match between columns
                        Premises: equally
liquidation
mutual agency
partnership
death of a partner
distribution of remaining cash to partners
unlimited liability
articles of partnership

Accepted Answer

The Answer of The final step in the liquidation of is...

Question 8

Sarno has a capital balance of $42,000 after adjusting the assets to fair market value. Minton contributes $22,000 to receive a 30% interest in the new partnership. The bonus paid by Minton is $2,800.

Accepted Answer

A) True 
 B)False

Question 9

Soledad and Winston are partners who share income in the ratio of 1:3 and have capital balances of $100,000 and $140,000 at the time they decide to terminate the partnership. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $130,000. What amount of loss on realization should be allocated to Soledad?

Accepted Answer

A)  $60,000 
B)  $27,500 
C)  $92,500 
D)  $32,500

Question 10

Details of the division of net income for a partnership should be disclosed

Accepted Answer

A)  in the asset section of the balance sheet 
B)  in the partners' subsidiary ledger 
C)  in the statement of cash flows 
D)  in the partnership income statement

Question 11

In a partnership liquidation, if a partner has a debit capital balance in his or her capital account, he or she is responsible for contributing personal assets sufficient to eliminate the deficit.

Accepted Answer

A) True 
 B)False

Question 12

Sharp and Townson had capital balances of $60,000 and $120,000 respectively on January 1 of the current year. On May 8, Sharp invested an additional $10,000 in the partnership. During the year, Sharp and Townson withdrew $25,000 and $45,000 respectively. After closing all expense and revenue accounts at the end of the year, Income Summary has a credit balance of $90,000, that Sharp and Townson have agreed to split on a 2:1 basis, respectively.

Accepted Answer

The answer of Sharp and Townson had capital balances of...

Question 13

Dissolution is the term which solely means to liquidate the partnership.

Accepted Answer

A) True 
 B)False

Question 14

X sells to A one-half of a partnership capital interest that totals $70,000 for $40,000. A's capital account in the partnership should be credited for $40,000.

Accepted Answer

A) True 
 B)False

Question 15

Partners Ken and Macki each have a $40,000 capital balance and share income and losses in a 3:2. Cash equals $20,000, noncash assets equal $120,000, and liabilities equal $60,000. If the noncash assets are sold for $60,000, and both partners agree to make up an capital deficits with personal cash contributions, Partner Macki will eventually receive cash of

Accepted Answer

A)  $0. 
B)  $4,000. 
C)  $16,000. 
D)  $24,000.

Question 16

Tomas and Saturn are partners who share income in the ratio of 3:1. Their capital balances are $40,000 and $60,000 respectively. Income Summary has a credit balance of $20,000. What is Saturn's capital balance after closing Income Summary to Capital?

Accepted Answer

A)  $55,000 
B)  $75,000 
C)  $45,000 
D)  $65,000

Question 17

Xavier and Yolonda have original investments of $50,000 and $100,000 respectively in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 10%, salary allowances of $27,000 and $18,000 respectively, and the remainder equally. How much of the net income of $40,000 is allocated to Xavier?

Accepted Answer

A)  $20,000 
B)  $22,000 
C)  $32,000 
D)  $0

Question 18

Sharp and Townson had capital balances of $60,000 and $90,000 respectively at the beginning of the current fiscal year. The articles of partnership provide for salary allowances of $25,000 and $30,000 respectively, an allowance of interest at 12% on the capital balances at the beginning of the year, with the remaining net income divided equally. Net income for the current year was $110,000.

Accepted Answer

The answer of Sharp and Townson had capital balances of...

Question 19

A change in the ownership of a partnership results in the

Accepted Answer

A)  consolidating of the partnership 
B)  liquidating of the partnership 
C)  realization of the partnership 
D)  dissolution of the partnership

Question 20

Paul and Roger are partners who share income in the ratio of 3:2. Their capital balances are $90,000 and $130,000 respectively. Income Summary has a credit balance of $50,000. What is Roger's capital balance after closing Income Summary to Capital?

Accepted Answer

A)  $155,000 
B)  $150,000 
C)  $110,000 
D)  $115,000

Exam 12: Accounting for Partnerships and Limited Liability Companies

Partners Ken and Macki each have a $40,000 capital balance and share income and losses in a 3:2. Cash equals $20,000, noncash assets equal $120,000, and liabilities equal $60,000. If the noncash assets are sold for $80,000, the Macki's capital account will

The salary allocation to partners used in dividing net income would also appear as salary expense on the partnership income statement.

Match the term with the appropriate definition.

Sarno has a capital balance of $42,000 after adjusting the assets to fair market value. Minton contributes $22,000 to receive a 30% interest in the new partnership. The bonus paid by Minton is $2,800.

Details of the division of net income for a partnership should be disclosed

In a partnership liquidation, if a partner has a debit capital balance in his or her capital account, he or she is responsible for contributing personal assets sufficient to eliminate the deficit.

Dissolution is the term which solely means to liquidate the partnership.

X sells to A one-half of a partnership capital interest that totals $70,000 for $40,000. A's capital account in the partnership should be credited for $40,000.

Tomas and Saturn are partners who share income in the ratio of 3:1. Their capital balances are $40,000 and $60,000 respectively. Income Summary has a credit balance of $20,000. What is Saturn's capital balance after closing Income Summary to Capital?

A change in the ownership of a partnership results in the

Paul and Roger are partners who share income in the ratio of 3:2. Their capital balances are $90,000 and $130,000 respectively. Income Summary has a credit balance of $50,000. What is Roger's capital balance after closing Income Summary to Capital?