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Exam 4: Accounting for Partnerships

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Question 31

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As in a proprietorship, changes in capital for a partnership may result from three causes. Which one of the following is not a cause for change?

A) additional investments by owner
B) drawings
C) allocating profit to the owner or owners
D) collection of account receivable

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Question 32

Multiple Choice

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In the final step of the liquidation process, remaining cash is distributed to partners

A) on an equal basis.
B) on the basis of the profit ratios.
C) on the basis of the remaining capital balances.
D) regardless of capital deficiencies.

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Question 33

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Petra Stone and Pam Peach are partners who share profit on a 3:2 basis, and on July 1, their capital account balances are $ 165,000 and $ 136,000 respectively. On July 1, Bobby Jo is admitted to the partnership. Instructions Prepare the entry to record Bobby's admission to the partnership under the following independent situations: a) Bobby purchases 50% of Petra's partnership interest from him for $ 115,000. b) Bobby purchases a 1/3 interest in the partnership by contributing cash of $ 96,500. c) Bobby purchases a 1/3 interest in the partnership by contributing cash of $ 167,900.

Which of the following is a factor that should be included in a partnership agreement?

When a long-lived asset is contributed to a partnership by a partner, the entry will record the fair value of the asset and the accumulated depreciation that has accumulated on it.

A partnership

At the end of December 2021, Ray Telsenburg, a partner in Telsenburg-Goldblum Company, had a balance in his drawings account of $ 18,000. Ray's capital account at the beginning of 2021 was $ 80,000. $ 5,000 of partnership profit was allocated to Ray in 2021. The entry to close Ray's drawings account at the end of 2021 would include a

The partners' profit and loss sharing ratio is 2:3:5, respectively. If the D, E, and F Partnership is liquidated and the equipment is worthless, the creditors will look to what partner's personal assets for settlement of the creditors' claims?

The Jackson-Chan partnership is terminated when creditor claims exceed partnership assets by $ 30,000. Chan is a millionaire and Jackson has no personal assets. Jackson's partnership interest is 75% and Chan's is 25%. Creditors

A capital deficiency exists when

A detailed listing of all the assets invested by a partner in a partnership appears on the Statement of Partners' Equity.

Which of the following is considered an advantage of a general partnership?

Hill invests $ 30,000 in cash (admission by investment) in the Morgan-Carr partnership to acquire a 1/4 interest. In this case

Partnerships are sometimes publicly accountable enterprises and these entities must follow

A partnership has unlimited life.

In a limited liability partnership, a partner has unlimited liability

Dana Peters was admitted to partnership with a 20% ownership interest after investing $ 30,000 cash. The partnership capital before the admission of Peters was $ 130,000. Which of the following best describes the impact on the capital accounts from this transaction?

Which of the following statements is incorrect regarding a partnership agreement?

A bonus to a departing partner may be paid if there is unrecorded goodwill resulting from the partnership's superior earnings record.

Connie Knox and Andrea Cardoza have capital accounts of $ 360,000 and $ 280,000, respectively. Bob Lee and Mike McClure are to join the partnership. Lee invests $ 55,000 in the partnership for which he receives a capital credit of $ 55,000. McClure purchases a one-half interest from Knox for $ 230,000 and a one-fourth interest from Cardoza for $ 100,000. Instructions a) Prepare the journal entries to record the admission of Lee and McClure to the partnership. b) Determine the capital balances of the partners after the admission of Lee and McClure.