FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 16: Partnership Accounting

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Multiple Choice

Review LaterAdd Note

Review Later

Farmer and Taylor formed a partnership with capital contributions of $200,000 and $250,000, respectively. Their partnership agreement calls for Farmer to receive a $70,000 per year salary. The remaining income or loss is to be divided equally. Assuming net loss for the current year is $15,000, the journal entry to allocate the net loss is:

A) Debit Income Summary, $15,000; Debit Farmer, Capital, $27,500; Credit Taylor, Capital, $42,500.
B) Debit Income Summary, $15,000; Credit Farmer, Capital, $7,500; Credit Taylor, Capital, $7,500.
C) Debit Taylor, Capital, $42,500; Credit Income Summary, $15,000; Credit Farmer, Capital, $27,500.
D) Debit Income Summary, $15,000; Debit Taylor, Capital, $27,500; Credit Taylor, Capital, $32,500.
E) Debit Income Summary, $15,000; Credit Taylor, Capital, $7,500; Credit Farmer, Capital, $7,500.

F) A) and B)
G) D) and E)

Correct Answer

verified

Show Answer

Question 52

Essay

Review LaterAdd Note

Review Later

Masco, Short, and Henderson who are partners in the MSH Company share income and loss in a 2:2:1 ratio. They plan to liquidate their partnership. At liquidation, their balance sheet appears as follows. Prepare journal entries for (a) the sale of land and equipment sold as a package for $500,000, (b) the allocation of the gain or loss, (c) the payment of the liabilities, and (d) the distribution of cash to the individual partners. MSH Company Balance Sheet January 31 $\begin{array} { | l | l | l | l | } \hline \text { Assets } & & \text { Liabilities and Equity } & \\\hline \text { Cash } & \$ 200,000 & \text { Accounts Payable } & \$ 221,500 \\\hline \text { Equipment } & 200,000 & \text { Masco, Capital } & 210,000 \\\hline \text { Land } & 350,000 & \text { Short, Capital } & 178,000 \\\hline & & \text { Henderson, Capital } & \\& & & 140,500 \\\hline \text { Total assets } & \$ 750,000 & \text { Total liabilities and equity } & \$ 750,000 \\\hline\end{array}$

Correct Answer

verified

None...

View Answer

Show Answer

Question 53

True/False

Review LaterAdd Note

To buy into an existing partnership, the new partner must contribute cash to the partnership.

The Redtail Partnership agrees to dissolve. The cash balance after selling all assets and paying all liabilities is $60,000. The final capital account balances are: Paulson, $35,000; Gray, $29,000; and Chang, ($4,000). Chang is unable to pay the capital deficiency. Prepare the journal entries to record the transactions required to dissolve this partnership.

Farmer and Taylor formed a partnership with capital contributions of $200,000 and $250,000, respectively. Their partnership agreement calls for Farmer to receive a $70,000 per year salary. The remaining income or loss is to be divided equally. Assuming net income for the current year is $135,000, the journal entry to allocate net income is:

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.

R. Stetson contributed $14,000 in cash plus office equipment valued at $7,000 to the SJ Partnership. The journal entry to record the transaction for the partnership is:

In a limited partnership the general partner has unlimited liability.

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

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

In a Limited Partnership, there must be more than one general partner.

Glade, Marker, and Walters are partners with beginning-year capital balances of $100,000, $50,000, and $50,000, respectively. Partnership net income for the year is $84,000. Make the necessary journal entry to close Income Summary to the capital accounts if: a. Partners agree to divide income based on their beginning-year capital balances. b. Partners agree to divide income based on the ratio of 5:3:2 (Glade:Marker:Walters), respectively. c. Partnership agreement is silent as to division of income and less.

Partner net income divided by average partner equity equals ________.

If a company wants to protect its three investors against personal liability risk, which of the following business forms would not be a suitable option?

Ranger and Sol formed a partnership with capital contributions of $150,000 and $180,000, respectively. Their partnership agreement called for Ranger to receive a $60,000 annual salary allowance. They also agreed to allow each partner a share of income equal to 10% of their initial capital investments. The remaining income or loss is to be divided equally. If the net income for the current year is $110,000, what are Ranger's and Sol's respective shares?

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:

T. Andrews contributed $14,000 in to the T & B Partnership. The journal entry to record the transaction for the partnership is:

When a partner invests in a partnership, his/her capital account is ________ for the invested amount.

Cinema Products LP is organized as a limited partnership that sells movie props. Information related to the capital balances is given below. Compute the partnership return on equity. Turner Kelly Total Capital balance, beginning of year 890,000 570,000 1,460,000 Net income for current year 85,000 65,000 150,000 Withdrawals for current year 40,000 25,000 65,000

Tower, Knight, and Spears are partners who share income and loss in a 3:2:2 ratio. The partnership's capital balances are as follows: Tower, $332,000; Knight, $124,000; and Spears, $214,000. Spears decides to withdraw from the partnership, and the partners agree not to have the assets revalued upon Spears' retirement. Prepare journal entries to record Spears' withdrawal from the partnership under each of the following separate assumptions: Spears (a) sells his interest to Conner for $200,000 after Tower and Knight approve the entry of Conner as a partner; (b) is paid $214,000 in partnership cash for his equity; (c) is paid $205,000 in partnership cash for his equity; (d) is paid $220,000 in partnership cash for his equity.