FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 12: Accounting for Partnerships

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Essay

Review LaterAdd Note

Review Later

Sharon and Nancy formed a partnership by making capital contributions of $130,000 and $195,000 respectively.The annual partnership income of $230,000 is to be allocated assuming a salary allowance of $40,000 to Sharon and $35,000 to Nancy;interest allowances of 12% on their initial capital investments;and the balance shared equally.Prepare the entries to record the initial capital investments,the allocation of net income,and close the partner's withdrawal accounts assuming that Sharon withdrew $50,000 and Nancy withdrew $45,000.

Correct Answer

verified

Show Answer

Question 32

True/False

Review LaterAdd Note

Review Later

In a limited partnership the general partner has unlimited liability.

A) True
B) False

Correct Answer

verified

Show Answer

Question 33

Multiple Choice

Review LaterAdd Note

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:

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.

Peters and Chong are partners and share equally in income or loss.Peters' current capital balance is $140,000 and Chong's is $130,000.Peters and Chong agree to accept Aaron with a 30% interest in the partnership.Aaron invests $98,000 in the partnership.The balances in Peters's and Chong's capital accounts after admission of the new partner equal:

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 Atkins's return on equity?

Design Services is organized as a limited partnership,with Miko Toori as one of its partners.Miko's capital account began the year with a balance of $35,000.During the year,Miko's share of the partnership income was $7,500,and Miko received $4,000 in distributions from the partnership.What is Miko's partner return on equity?

Partners in a partnership are taxed on the partnership income,not the amounts they withdraw from the partnership.

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?

Wallace and Simpson formed a partnership with Wallace contributing $60,000 and Simpson contributing $40,000.Their partnership agreement calls for the income (loss) division to be based on the ratio of capital investments.The partnership had income of $150,000 for its first year of operation.When the Income Summary is closed,the journal entry to allocate partner income is:

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?

Carter Pearson is a partner in Event Promoters.His beginning partnership capital balance for the current year is $55,000,and his ending partnership capital balance for the current year is $62,000.His share of this year's partnership income was $6,250.What is his partner return on equity?

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

Partners' withdrawals of assets are:

Conklin plans to leave the CAP Partnership.The recorded balance in her capital account is $48,000.The remaining partners,Arthurs and Preston,agree to pay Conklin $58,000 cash and Conklin accepts.The partners share income and loss equally.Prepare the journal entry to record the transaction.

Partners in a partnership are not taxed on their withdrawals,but rather on _____________________________.

Partner net income divided by average partner equity equals ______________________.

Bannister invested $110,000 and Wilder invested $99,500 in a new partnership.They agreed to an annual interest allowance of 10% on the partners' beginning-year capital balance,with the balance of income or loss to be divided equally.Under this agreement,what are the income or loss shares of the partners if the annual partnership income is $202,000?

The withdrawals account of each partner is closed to retained earnings at the end of the accounting period.

Lin and Coral invested $99,000 and $126,000,respectively,in a partnership they began one year ago.Assuming the partnership earned $120,000 during the current year;compute the share of the net income each partner should receive under each of these independent assumptions. 1.The partnership contract specifies salary allowances of $45,000 to Lin and $60,000 to Coral,and any balance shared equally.