FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 16: Accounting for Partnerships

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 61

Multiple Choice

Review LaterAdd Note

Review Later

Web Services is organized as a limited partnership, with David White as one of its partners. David's capital account began the year with a balance of $45,000. During the year, David's share of the partnership income was $7,500 and David received $4,000 in distributions from the partnership. What is David's partner return on equity?

A) 7.8%
B) 8.9%
C) 15.4%
D) 16.0%
E) 16.7%

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

Correct Answer

verified

Show Answer

Question 62

True/False

Review LaterAdd Note

Review Later

When a partnership is liquidated, its business is ended.

A) True
B) False

Correct Answer

verified

Show Answer

Question 63

Essay

Review LaterAdd Note

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.

Partners' withdrawals are credited to their separate withdrawals accounts.

McCartney, Harris, and Hussin are dissolving their partnership. Their partnership agreement allocates income and losses equally among the partners. The current period's ending capital account balances are McCartney, $15,000, Harris, $15,000, Hussin, $(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. Hussin pays $2,000 to cover the deficiency in his account. The general journal entry to record the final distribution would be:

A partnership recorded the following journal entry: This entry reflects:

If a partner withdraws from a partnership and the recorded value of his or her equity is overstated, then a bonus goes to _____________________; if the recorded value of the withdrawing partner's equity is understated, then a bonus goes to _______________________.

The BlueFin Partnership agreed 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.

If at the time of partnership liquidation, a partner has a $5,000 capital deficiency and pays the partnership $5,000 out of personal assets to cover the deficiency, then that partner is entitled to share in the final distribution of cash.

If a partnership contract provides for interest at 10% annually on each partner's investment, the interest:

Partnership accounting:

When partners invest in a partnership, their capital accounts are credited for the amount invested.

Conley and Liu allow Lepley to purchase a 25% interest in their partnership for $35,000 cash. Lepley has exceptional talents that will enhance the partnership. Conley's and Liu's capital account balances are $55,000 each. The partners have agreed to share income or loss equally. Prepare the general journal entry to record the admission of Lepley to the partnership.

Groh and Jackson are partners. Groh's capital balance in the partnership is $64,000 and Jackson's capital balance is $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:

The statement of partners' equity shows the beginning balance in retained earnings, plus investments, less withdrawals, the income or loss, and the ending balance in retained earnings.

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

Which of the following best lists the disadvantages of a partnership:

In the absence of a partnership agreement, the law says that income and loss should be allocated based on:

Define the partner return on equity ratio and explain how a specific partner would use this ratio.

Blaser, Lukins, and Franko formed a partnership with Blaser contributing $160,000, Lukins contributing $520,000, and Franko contributing $240,000. Their partnership agreement called for the income (loss) division to be based on the ratio of capital investments. If the partnership had income of $275,000 for its first year of operation, what amount of income (rounded to the nearest dollar) would be credited to Franko's capital account?