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Exam 16: Partnership Accounting

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Question 21

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Barber and Atkins are partners in an accounting firm and share net income and loss equally.Barber's beginning partnership capital balance for the current year is $285,000,and Atkins' beginning partnership capital balance for the current year is $370,000.The partnership had net income of $250,000 for the year.Barber withdrew $90,000 during the year and Atkins withdrew $100,000. -What is Barber's ending equity?

A) $357,500
B) $362,500
C) $445,000
D) $320,000
E) $195,000

F) A) and B)
G) C) and D)

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Question 22

Multiple Choice

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Cox,North,and Lee form a partnership.Cox contributes $180,000,North contributes $150,000,and Lee contributes $270,000.Their partnership agreement calls for the income or loss division to be based on the ratio of capital invested.If the partnership reports income of $150,000 for its first year,what amount of income is credited to Lee's capital account? (Do not round your intermediate calculations.)

A) $50,000.
B) $67,500.
C) $45,000.
D) $54,000.
E) $60,000.

F) A) and B)
G) All of the above

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Question 23

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When a partner leaves a partnership,the present partnership ends.

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,$30,000.After all the assets are sold and liabilities are paid,but before any contributions to cover any deficiencies,there is $54,000 in cash to be distributed.The general journal entry to record the final distribution would be:

Advantages of a partnership include:

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?

Fontaine and Monroe are forming a partnership.Fontaine invests a building that has a market value of $250,000; the partnership assumes responsibility for a $75,000 note secured by a mortgage on the property.Monroe invests $100,000 in cash and equipment that has a market value of $55,000. -For the partnership,the amounts recorded for total assets and for total capital account are:

A partnership designed to protect innocent partners from malpractice or negligence claims resulting from acts of another partner is a(n) :

When a partnership is liquidated:

What factors should be considered before establishing a partnership?

Pat and Nicole formed Here & There as a limited liability company.Unless the member owners elect to be treated otherwise,the Internal Revenue Service will tax the LLC as:

The income or loss of a partnership is allocated to the partners according to the partnership agreement,and it is included in determining the taxable income for each partner's tax return.

Assume that the M & L partnership agreement gave March 60% and Ludwig 40% of partnership income and losses.The partnership lost $27,000 in the current period.This implies that March's share of the loss equals $16,200,and Ludwig's share equals $10,800.

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:

________ means that partners can commit or bind the partnership to any contract within the scope of the partnership business.

Partner return on equity can be used by each partner to help decide whether additional investment or withdrawal of resources is best for that partner.

Zheng invested $100,000 and Murray invested $200,000 in a partnership.They agreed to share incomes and losses by allowing a $60,000 per year salary allowance to Zheng and a $40,000 per year salary allowance to Murray,plus an interest allowance on the partners' beginning-year capital investments at 10%,with the balance to be shared equally. -Under this agreement,the shares of the partners when the partnership earns $105,000 in income are:

Bloom and Plant organize a partnership on January 1.Bloom's initial investment consists of $800 cash,$1,700 equipment and a $500 note payable reflecting a bank loan for the new business.Plant's initial investment is cash of $2,000.These amounts are the values agreed on by both partners.The journal entry to record Plant's investment is:

A partnership that has two classes of partners,general and limited,where the limited partners have no personal liability beyond the amounts they invest in the partnership,and no active role in the partnership,except as specified in the partnership agreement is a:

During the closing process,partner's capital accounts are ________ for their share of net income and ________ for their share of net loss.