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Exam 12: Accounting for Partnerships

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Question 51

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

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Question 52

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

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Question 53

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Groh and Jackson are partners.Groh's capital balance in the partnership is $64,000,and Jackson's capital balance $61,000.Groh and Jackson have agreed to share equally in income or loss.Groh and Jackson agree to accept Block with a 25% interest.Block will invest $35,000 in the partnership.The bonus that is granted to Block equals:

Summers and Winters formed a partnership on January 1.Summers contributed $90,000 cash and equipment with a market value of $60,000.Winters' 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 (Summers: Winters). (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 Summers of $30,000 and Winters 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.

When a partner leaves a partnership,the withdrawing partner is entitled to a bonus if the recorded equity is overstated.

If the partners agree on a formula to share income and say nothing about losses,then the losses are shared equally.

An unincorporated association of two or more persons to carry on a business for profit as co-owners is a:

Conley and Liu allow Lepley to purchase a 25% interest in their partnership for $50,000 cash.Conley and Liu both have capital balances of $55,000 each,and have agreed to share income and loss equally.Prepare the journal entry to record the admission of Lepley to the partnership.

During the closing process,each partner's withdrawals account is closed to __________.

Renee Jackson is a partner in Sports Promoters.Her beginning partnership capital balance for the current year is $55,000,and her ending partnership capital balance for the current year is $62,000.Her share of this year's partnership income was $5,250.What is her partner return on equity?

Armstrong plans to leave the FAP Partnership.The recorded value of her capital account is $48,000.The remaining partners Floyd and Peters agree to pay Armstrong $40,000 cash and Armstrong accepts.The partners share income and loss equally.Prepare the general journal entry to record the withdrawal from the partnership.

The BlueFin Partnership agrees to dissolve.The remaining cash balance after liquidating partnership assets and liabilities is $60,000.The final capital account balances are: Smith,$30,000; Nagy,$20,000; and Russ,$10,000.Prepare the journal entry to distribute the remaining cash to the partners.

A partnership that has at least two classes of partners,general and limited,allows the limited partners to have no personal liability beyond the amounts they invest in the partnership,and the limited partners have no active role except as specified in the partnership agreement is a ___________________ partnership.

In a limited partnership the general partner has unlimited liability.

David and Jeannie formed This & That as a limited liability company.Unless the member owners elect to be treated otherwise,the Internal Revenue Service will tax the LLC as:

Groh and Jackson are partners.Groh's capital balance in the partnership is $64,000,and Jackson's capital balance $61,000.Groh and Jackson have agreed to share equally in income or loss.Groh and Jackson agree to accept Block with a 20% interest.Block will invest $35,000 in the partnership.The bonus that is granted to Groh and Jackson equals:

The equity section of the balance sheet of a partnership can report the separate capital account balances of each partner.

Partnership accounting:

Nee High and Low Jack are partners in an accounting firm and share net income and loss equally.High's beginning partnership capital balance for the current year is $285,000,and Jack's beginning partnership capital balance for the current year is $370,000.The partnership had net income of $250,000 for the year.High withdrew $90,000 during the year and Jack withdrew $100,000.What is Jack's return on equity? A.41.3% B.43.9% C.32.7% D.33.8% E.36.5%

Badger and Fox are forming a partnership.Badger invests a building that has a market value of $350,000; the partnership assumes responsibility for a $125,000 note secured by a mortgage on the property.Fox invests $100,000 in cash and equipment that has a market value of $75,000.For the partnership,the amounts recorded for the building and for Badger's Capital account are: