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Exam 16: Partnership Accounting

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Question 101

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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 balances in Mace's and Bowen's capital accounts after admission of the new partner equal:

A) Mace $135,000; Bowen $120,000.
B) Mace $137,000; Bowen $122,000.
C) Mace $133,000; Bowen $118,000.
D) Mace $139,000; Bowen $120,000.
E) Mace $135,000; Bowen $124,000.

F) C) and E)
G) All of the above

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Question 102

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________ implies that each partner in a partnership can be called on to personally pay a partnership's debts.

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Question 103

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Montez and Flair formed a partnership.Montez contributed $15,000 cash and accounts receivable worth $11,000.Flair contributed cash of $5,000; inventory valued at $16,000; and supplies valued at $2,000.Prepare the journal entries to record each partner's investment in the new partnership.

Mesner's and Sanchez's company is organized as a partnership.At the prior year-end,Mesner's equity balance was $258,000 and Sanchez's was $212,000.For the current year,partnership net income is $125,000 ($75,000 allocated to Mesner and $50,000 allocated to Sanchez); withdrawals are $77,000 ($40,000 for Mesner and $37,000 for Sanchez).Compute the total partnership return on equity and the individual partner return on equity ratios.

Partner net income divided by average partner equity equals ________.

The following information is available regarding Grace Smit's capital account in Enterprise Consulting Group,a general partnership,for a recent year: $\begin{array} { l l } \text { Beginning of the year balance } & \$ 22,000 \\\text { Share of partrership income } & \$ 8,500 \\\text { Withdrawals made during the year } & \$ 6,000\end{array}$ What is Smit's partner return on equity during the year in question?

Masters,Hardy,and Rowen are dissolving their partnership.Their partnership agreement allocates income and losses equally among the partners.The current period's ending capital account balances are Masters,$15,000; Hardy,$15,000; Rowen,$(2,000) .After all the assets are sold and liabilities are paid,but before any contributions to cover any deficiencies,there is $28,000 in cash to be distributed.Rowen pays $2,000 to cover the deficiency in his account.The general journal entry to record the final distribution would be:

Admitting a partner by accepting assets is a personal transaction between one or more current partners and the new partner.

Match each of the following terms with the appropriate definitions. -The legal relationship among partners whereby each partner can commit or bind the partnership to any contract within the scope of the partnership's business.