Question 1

Delta and Chen form a partnership and invest the following assets and liabilities
 In the journal provided prepare the entry to record the formation of the partnership.(Omit explanation. )

Accepted Answer

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Question 2

April and Cammy are partners who have agreed to admit Elena,who will invest $30,000 for a 20 percent interest.The previous capital balances were $30,000 and $60,000 for April and Cammy,respectively.April and Cammy had shared profits equally.What amount will be recorded in Elena's Capital account?
A)$12,000 credit
B)$24,000 credit
C)$30,000 credit
D)$18,000 credit

Accepted Answer

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Question 3

List four advantages and four disadvantages of the partnership form of business.

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Question 4

Zach has bought Biannca's interest in the A&B Partnership for a $120,000 direct payment to Biannca.Zach and Biannca's capital balances before the sale were $48,000 and $72,000,respectively.The entry to record the purchase of interest in partnership is:
A)
B)
C)
D)

Accepted Answer

The entry to record the purchase of interest in partnership is to debit Biannca's Capital account for $72,000 (her previous balance) and credit her Capital account for $120,000 (the amount received for selling her interest to Zach). The difference between those two amounts is $48,000, which is the amount credited to Zach's Capital account. Therefore, the correct entry is: Debit Biannca's Capital account for $72,000, credit Biannca's Capital account for $120,000, and credit Zach's Capital account for $48,000. The correct choice is B.

Question 5

Juan invests $120,000 for a one-fifth interest in a partnership in which the other partners have capital totaling $240,000 before admitting Juan.After distribution of the bonus,Juan's capital is
A)$120,000
B)$72,000
C)$96,000
D)$48,000

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Question 6

Briyanna and Greg form a partnership and invest the following assets and liabilities.Greg's building is subject to a $40,000 mortgage that is not assumed by the partnership.

In the journal provided prepare the entry to record the formation of the partnership.(Omit explanation. )

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Question 7

Describe how a dissolution of a partnership is different from a liquidation of a partnership.

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Question 8

Chelsea,Jack,and Connor have a partnership.Chelsea wishes to withdraw from the partnership by removing assets that represent less than her current capital balance.Discuss who,if anyone,receives a bonus.

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Question 9

Chelsea,Jack,and Connor have a partnership.Chelsea wishes to withdraw from the partnership by removing assets that are greater than her current capital balance.Discuss who,if anyone,receives a bonus.

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Question 10

Justin and Nicole are forming a partnership.What are some of the factors they should consider in deciding how income might be divided?

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Question 11

Discuss how each of the following would be recorded in the partner's capital account and why:
a.Trevor invests into the partnership land that he paid $40,000 for 3 years ago.Today,the fair market value of the land is $65,000.
b.Marcela invests into the partnership a building that she paid $24,000 for 2 years ago.The building has a $10,000 mortgage and its fair market value is $18,000.The partnership assumes the mortgage.
c.Courtney invests into the partnership equipment she paid $12,000 for earlier in the year by signing a note payable that the partnership is not assuming.The equipment has a fair market value of $15,000.

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Question 12

A liquidation differs from a dissolution in that in a liquidation
A)the business will not continue.
B)assets may be revalued.
C)gains are distributed according to the partnership agreement.
D)there may be an adjustment of partners' Capital accounts.

Accepted Answer

A liquidation involves the winding up of the business, meaning that it will not continue. In contrast, a dissolution only terminates the partnership but may allow for the business to continue with a new partnership or ownership structure. The other choices may apply to either liquidation or dissolution, so they do not differentiate between the two.

Question 13

Avery and Bert are partners who share profits in a ratio of 2:1 and have capital balances of $75,000 and $150,000,respectively.The partners agree to admit Carmen to the partnership.Carmen invests $75,000 for a 35 percent interest in the partnership.The new total capital balance after admitting Carmen is $300,000.The entry to record the admission of Carmen to the partnership is:
A)
B)
C)
D)

Accepted Answer

To admit Carmen to the partnership, her investment of $75,000 and her 35% interest in the partnership must be recorded. The new total capital balance shows that the partnership's capital increased by $75,000, which is equal to Carmen's investment. The entry to record the admission of Carmen to the partnership is:

Cash (Carmen's investment)      $75,000
Carmen's capital                      $45,000 (35% x $225,000)
Avery's capital                          $30,000 (2/3 x $75,000)
Bert's capital                              $150,000
Total                                             $300,000

Therefore, the correct journal entry to record the admission of Carmen to the partnership is C) 11ed6f24_0cb7_533d_a210_b7fc776857d4_TB2086_00.

Question 14

Austin invests $80,000 for a 20 percent interest in a partnership that has capital totaling $300,000 after admitting Austin.Which of the following is true?
A)The original partners received a bonus of $20,000.
B)Austin received a bonus of $20,000.
C)Austin's capital is $80,000.
D)The original partners' capital in the business was $240,000 before admitting Austin.

Accepted Answer

The original partners received a bonus because Austin's investment for a 20% interest implies the total capital should be $400,000 ($80,000 / 20%). However, the total capital is $300,000 after admitting Austin, indicating the original capital was $220,000 ($300,000 - $80,000). Thus, for Austin to have a 20% interest worth $80,000 in a partnership now valued at $300,000, the original partners' capital was effectively valued at $320,000 ($80,000 / 20% = $400,000 total value - $80,000 Austin's contribution = $320,000), giving them a $20,000 bonus ($320,000 - $300,000).

Question 15

Which of the following is correct?
A)Total assets + Partner's equity = Total liabilities.
B)Total assets + Partner's equity - Total liabilities = Total equity.
C)Total assets - Partner's equity = Total liabilities.
D)Total assets + Total liabilities = Partner's equity.

Accepted Answer

The correct equation is Total assets - Partner's equity = Total liabilities. This is a rearrangement of the basic accounting equation: Total assets = Total liabilities + Owner's/Partner's equity. Subtracting Partner's equity from both sides gives the correct relationship.

Question 16

April and Cammy are partners who have agreed to admit Elena,who will invest $30,000 for a 20 percent interest.The previous capital balances were $30,000 and $60,000 for April and Cammy,respectively.April and Cammy had shared profits equally.The entry that records Elena's admission to the partnership is:
A)
B)
C)
D)

Accepted Answer

Elena is investing $30,000 for a 20% interest in the partnership. This means the total value of the partnership is $150,000 ($30,000/20%). 
Before Elena's admission, the previous capital balances were $30,000 for April and $60,000 for Cammy. Their total capital balance was $90,000. 
To admit Elena, her $30,000 investment will be added to the total capital balance, making it $120,000. 
April and Cammy's shares will remain equal but will now be based on a total capital balance of $120,000 instead of $90,000. 
Therefore, April and Cammy's capital balances will be adjusted to $36,000 each (1/3 of $120,000). 
To record Elena's admission, we need to credit her investment of $30,000 and debit the capital accounts of April and Cammy by $6,000 each (the difference between their previous capital balance of $30,000 each and their new balance of $36,000 each).

The correct journal entry is:
Cash (or Elena, Capital) - $30,000
April, Capital - $6,000
Cammy, Capital - $6,000
To record Elena's investment in the partnership.

Question 17

Eddie and Lauren are partners in a business.Eddie's original capital contribution was $80,000,and Lauren's was $120,000.They agreed to share profits as follows:
  Calculate each partner's share of profits,assuming (a)the profit was $200,000,and, (b)the profit was $140,000.

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Question 18

Warren and Spencer are partners in a drilling operation.Warren purchased a drilling rig to be used in the partnership's operations.Is this purchase binding on Spencer even though he was not involved in it? Explain your answer.

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Question 19

Erin,Rachel,and Travis are partners in ERT Company,with average capital balances for the year of $60,000,$80,000,and $40,000,respectively.They share remaining income in a 2:5:3 ratio,respectively,after each receives a $30,000 salary and 10 percent interest on his or her average capital balance.In the journal provided,prepare the entries without explanations to close income into their Capital accounts,assuming net income of $148,000.

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Question 20

When a partner withdraws from a partnership taking assets that represent less than his or her capital balance,
A)the remaining partners receive a bonus.
B)no bonus results.
C)the remaining partners owe the withdrawing partner the difference.
D)the withdrawing partner receives a bonus.

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Quiz 27: Accounting for Unincorporated Businesses

Delta and Chen form a partnership and invest the following assets and liabilities In the journal provided prepare the entry to record the formation of the partnership.(Omit explanation. )

April and Cammy are partners who have agreed to admit Elena,who will invest $30,000 for a 20 percent interest.The previous capital balances were $30,000 and $60,000 for April and Cammy,respectively.April and Cammy had shared profits equally.What amount will be recorded in Elena's Capital account?

List four advantages and four disadvantages of the partnership form of business.

Zach has bought Biannca's interest in the A&B Partnership for a $120,000 direct payment to Biannca.Zach and Biannca's capital balances before the sale were $48,000 and $72,000,respectively.The entry to record the purchase of interest in partnership is:

Juan invests $120,000 for a one-fifth interest in a partnership in which the other partners have capital totaling $240,000 before admitting Juan.After distribution of the bonus,Juan's capital is

Briyanna and Greg form a partnership and invest the following assets and liabilities.Greg's building is subject to a $40,000 mortgage that is not assumed by the partnership. In the journal provided prepare the entry to record the formation of the partnership.(Omit explanation. )

Describe how a dissolution of a partnership is different from a liquidation of a partnership.

Chelsea,Jack,and Connor have a partnership.Chelsea wishes to withdraw from the partnership by removing assets that represent less than her current capital balance.Discuss who,if anyone,receives a bonus.

Chelsea,Jack,and Connor have a partnership.Chelsea wishes to withdraw from the partnership by removing assets that are greater than her current capital balance.Discuss who,if anyone,receives a bonus.

Justin and Nicole are forming a partnership.What are some of the factors they should consider in deciding how income might be divided?

A liquidation differs from a dissolution in that in a liquidation

Austin invests $80,000 for a 20 percent interest in a partnership that has capital totaling $300,000 after admitting Austin.Which of the following is true?

Which of the following is correct?

Eddie and Lauren are partners in a business.Eddie's original capital contribution was $80,000,and Lauren's was $120,000.They agreed to share profits as follows: Calculate each partner's share of profits,assuming (a)the profit was $200,000,and, (b)the profit was $140,000.

Warren and Spencer are partners in a drilling operation.Warren purchased a drilling rig to be used in the partnership's operations.Is this purchase binding on Spencer even though he was not involved in it? Explain your answer.

When a partner withdraws from a partnership taking assets that represent less than his or her capital balance,