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Exam 16: Partnership Accounting

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Question 61

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In a limited partnership the general partner has unlimited liability.

A) True
B) False

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Question 62

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A partner can withdraw from a partnership by any of the following means except:

A) Selling his/her interest to another person for cash.
B) Selling his/her interest to another person in exchange for assets.
C) Receiving cash from the partnership in the amount of his/her interest.
D) Receiving assets from the partnership in the amount of his/her interest.
E) Close the business and liquidate the assets under the mutual agency principle.

F) None of the above
G) B) and D)

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Question 63

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

A partnership recorded the following journal entry: $\begin{array}{|l|l|l|}\hline\text { Cash } & 60,000 \\\hline \text { B. Founder, Capital } & 10,000 \\\hline \text { R. Aqui, Capital } & 10,000 \\\hline \text { H. Joiner, Capital } &&80,000\\\hline \end{array}$ This entry reflects:

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?

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

Partners are taxed on their withdrawals,not on their share of partnership income.

Assets invested by a partner into a partnership become the property of the business.

Lemon and Parks are partners.On October 1,Lemon's capital balance is $75,000,and Parks' capital balance is $125,000.With the partnership's approval,Parks sells ½ of his partnership interest to Tambling for $70,000.Prepare the journal entry to record this transaction in the partnership records.

When a partner invests in a partnership,his/her capital account is ________ for the invested amount.

Reno contributed $104,000 in cash plus equipment valued at $27,000 to the RD Partnership.The journal entry to record the transaction for the partnership is:

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

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 Fontaine's Capital account and for Monroe's Capital account are:

Mutual agency implies that each partner in a partnership is a fully authorized agent of the partnership.Which of the following statements is correct regarding the authority of a partner to bind the partnership in dealings with third parties?

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

Darien and Hayden agree to accept Kevin into their partnership.Kevin will contribute $22,000 in cash.Prepare the journal entry to record this transaction.

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?

Partners' withdrawals of assets are:

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.

Kramer and Feldman Company is organized as a partnership.At the prior year-end,Kramer's equity balance was $352,000 and Feldman's was $256,000.For the current year,partnership net income is $137,000 ($77,000 allocated to Kramer and $60,000 allocated to Feldman); withdrawals are $87,000 ($45,000 for Kramer and $42,000 for Feldman).Compute the total partnership return on equity and the individual partner return on equity ratios.