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Exam 15: Reporting and Analyzing Partnerships

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Question 41

True/False

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Assets invested by a partner into a partnership remain the property of the individual partner.

A) True
B) False

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Question 42

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Renee Jackson is a partner in Sports Promoters.Her beginning partnership capital balance for the current year $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?

A) 8.47%
B) 8.97%
C) 9.54%
D) 1047%
E) 1060%

F) C) and D)
G) B) and E)

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Question 43

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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.

Collins and Farina are forming a partnership.Collins is investing a building that has a market value of $80,000 and a book value of $65,000.However,the building carries a $56,000 mortgage that will be assumed by the partnership.Farina is investing $20,000 cash.Total capital in the partnership will be:

Rodriguez,Sate and Melton are dissolving their partnership.Their partnership agreement allocates income and losses equally among the partners.The current period's ending capital account balances are Rodriguez,$32,000,Sate,$28,000,Melton,$(4,000) .After all the assets are sold and liabilities are paid,but before any contributions are considered to cover any deficiencies,there is $56,000 in cash to be distributed.Melton pays $2,000 to cover the deficiency in her account.The final distribution of cash would be as follows:

Admitting a partner into a partnership by accepting assets is a personal transaction between one or more current partners and the new partner.

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

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

Partner return on equity is calculated as ______________________________.

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 20% interest.Block will invest $35,000 in the partnership.The bonus that is granted to Groh and Jackson equals:

A capital deficiency can arise from liquidation losses,excessive withdrawals before liquidation or recurring losses in prior periods.

S.Reising contributed $48,000 in cash plus equipment valued at $73,000 to the Reising Construction Partnership.The equipment had a book value of $65,000.The journal entry to record the transaction for the partnership would include a:

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

In closing the accounts at the end of a period,the partners' capital accounts are credited for their share of the partnership loss or debited for their share of the partnership net income.

Which of the following statements is true?

How are partners' investments in a partnership recorded?

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

Durango and Verde formed a partnership with capital contributions of $150,000 and $190,000,respectively.Their partnership agreement called for Durango to receive a $50,000 annual salary allowance.They also agreed to allow each partner a share of income equal to a 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 $120,000,what are Durango's and Verde's respective shares?

The withdrawals account of each partner is:

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