Question 1

Which of the following is true of ownership changes in a partnership?

Accepted Answer

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Question 2

Floyd and Merriam start a partnership business on June 12, 2019. Their capital account balances as of December 31, 2020 stood as follows:  They agreed to admit Ramelow into the business for a one-third interest in the new partnership. Ramelow contributes $16,000 cash in exchange for the partnership interest. Assume that Floyd and Merriam shared profits and losses equally before the admission of Ramelow. Which of the following is the correct journal entry to record the above admission?

Accepted Answer

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Question 3

Rex and Sandy are partners. Rex has a capital balance of $370,000 and Sandy has a capital balance of $280,000. Marcus invests a building worth $220,000 in order to acquire an interest in the partnership. What is Marcus's partnership share after he makes the investment? (Assume no bonus to any partner.)

Accepted Answer

A)Marcus's share in the partnership after the investment
= $220,000 / ($370,000 + $280,000 + $220,000)= $220,000 / $870,000 = 25.3%

Question 4

Floyd and Merriam start a partnership business on June 12, 2019. Their capital account balances as of December 31, 2020 stood as follows:  They agreed to admit Ramelow into the business for a one-fifth interest in the new partnership. Ramelow contributes $27,000 cash in exchange for the partnership interest. Assume that Floyd and Merriam shared profits and losses in a 3:1 ratio before the admission of Ramelow. Which of the following is the correct journal entry to record the above admission?

Accepted Answer

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Question 5

Frank and Harry are partners. Frank has a capital balance of $51,000 and Harry has a capital balance of $40,000. Bill invested a building worth $27,000 to the partnership for an ownership interest of 20%. Calculate Bill's capital in the new partnership.

Accepted Answer

D)Bill will get an ownership interest of 20% of ($51,000 + $40,000 + $27,000)
= 0.2 × $118,000 = $23,600

Question 6

Sarah and Jane formed a partnership with capital contributions of $210,000 and $123,000, respectively. Peter contributed $86,000 to acquire an ownership interest of 12% in the new partnership. How much is the total bonus for the existing partners?

Accepted Answer

Peter will get an ownership interest of 12% of ($210,000 + $123,000 + $86,000)
= 0.12 × $419,000 = $50,280.
Total bonus for the existing partners = $86,000 - $50,280 = $35,720

Question 7

Keith and Jim are partners. Keith has a capital balance of $49,000 and Jim has a capital balance of $38,000. Bill invested $33,000 to acquire an ownership interest of 30%. Which of the following statements is true of this transaction?

Accepted Answer

D)Bill's ownership in the partnership after the investment
= 0.3 × ($49,000 + $38,000 + $33,000)= $36,000
Bill's equity bonus = $36,000 - $33,000 = $3,000

Question 8

Ruby and Anita are partners. Ruby has a capital balance of $270,000 and Anita has a capital balance of $180,000. Denis invests a building with a current market value of $170,000 to acquire an interest in the new partnership. Which of the following is true of the journal entry to record this transaction? (Assume no bonus to any partner.)

Accepted Answer

When Denis invests the building with a current market value of $170,000, the value of the new partnership increases by that amount. Therefore, the building will be debited for $170,000 to reflect its contribution to the partnership. Denis will be credited for $170,000 to reflect his contribution to the partnership. This is a simple entry that does not affect the capital accounts of existing partners, so choices A, C, and D are incorrect.

Question 9

Which of the following is true when a new partner is admitted by purchasing an existing partner's interest?

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Question 10

Dominic and Morgan are partners. Dominic has a capital balance of $360,000 and Morgan has a capital balance of $225,000. Morgan sells $125,000 of his ownership to Lance. Which of the following is true of the items in balance sheet?

Accepted Answer

When Morgan sells $125,000 of his ownership to Lance, Morgan's capital balance decreases by $125,000, but Lance's capital balance increases by $125,000. Therefore, the total equity remains unchanged as the decrease in Morgan's capital balance is offset by the increase in Lance's capital balance. The assets do not change as a result of this transaction.

Question 11

Raul and Bianca are partners. Raul has a capital balance of $50,000 and Bianca has a capital balance of $37,000. Bianca sells half of her ownership interest to Bill for $20,500. Which of the following is true of the journal entry to record this transaction?

Accepted Answer

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Question 12

Floyd and Merriam start a partnership business on June 12, 2019. Their capital account balances as of December 31, 2020 stood as follows:  Floyd agrees to sell half of his share to Ramelow in exchange for $32,000 cash. Which of the following is the correct journal entry in the books of the firm for the above transfer of interest?

Accepted Answer

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Question 13

Allan and Ralph are partners. Allan has a capital balance of $92,000 and Ralph has a capital balance of $75,000. Carol invested $60,000 to acquire an ownership interest of $50,000. Which of the following is true of the impact of the transaction on the balance sheet?

Accepted Answer

With Carol's investment, the assets and equity of the business will increase. Carol's investment of $60,000 will be recorded as an increase in assets, while her ownership interest of $50,000 will be recorded as an increase in equity. The total capital balance will be $92,000 + $75,000 + $50,000 = $217,000. Therefore, both assets and equity will increase.

Question 14

Keith and Jim are partners. Keith has a capital balance of $47,000 and Jim has a capital balance of $32,000. Jim sells $15,000 of his ownership to Bill. Which of the following is true of the journal entry to admit Bill?

Accepted Answer

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Question 15

Keith and Jim are partners. Keith has a capital balance of $51,000 and Jim has a capital balance of $39,000. Bill invested a building worth $27,000 to the partnership for an ownership interest of 20%. How much is the total bonus for the existing partners?

Accepted Answer

C)Bill will get an ownership interest of 20% of ($51,000 + $39,000 + $27,000)= 0.2 × $117,000 = $23,400
Total bonus to existing partners = $27,000 - $23,400 = $3,600

Question 16

Floyd and Merriam start a partnership business on June 12, 2019. Their capital account balances as of December 31, 2020 stood as follows:  They agreed to admit Ramelow into the business for a one-third interest in the new partnership. Ramelow contributes $24,000 cash in exchange for the partnership interest. What is the correct capital account balance of Ramelow after he enters the business?

Accepted Answer

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Question 17

Floyd and Merriam start a partnership business on June 12, 2019. Their capital account balances as of December 31, 2020 stood as follows:  Floyd and Merriam share profits and losses equally. They agreed to dissolve the partnership and start a new one, admitting Ramelow for one-half share in the capital in exchange for land and equipment having a total market value of $72,000. Which of the following is the correct journal entry to record the introduction of Ramelow as a partner?

Accepted Answer

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Question 18

Anna and Naomi are partners. Anna has a capital balance of $49,000 and Naomi has a capital balance of $42,000. Gary invested $27,000 to acquire an ownership interest of $18,000. Which of the following is true of the partnership journal entry to record the receipt of Gary's contribution? (Assume the existing partners equally divide the bonus.)

Accepted Answer

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Question 19

Issac and Karl are partners. Issac has a capital balance of $25,000 and Karl has a capital balance of $20,000. Bill invested $15,000 to acquire an ownership interest of 30%. How does this transaction affect the balance sheet items?

Accepted Answer

When Bill invests $15,000 to acquire 30% ownership interest, the total capital of the partnership increases by $15,000, making it $60,000 ($25,000 + $20,000 + $15,000). As a result, both assets and equity increase, because the investment results in cash or a receivable asset, which increases the total assets on the balance sheet, as well as an additional capital contribution from Bill, which increases the overall equity of the partnership.

Question 20

Shaun and Rick are partners. Shaun has a capital balance of $12,000 and Rick has a capital balance of $10,000. Edwin invests a building with a current market value of $8,000 to acquire an interest in the new partnership. Which of the following is true of the effect of the transaction on the balance sheet? (Assume no bonus to any partner.)

Accepted Answer

When Edwin invests the building worth $8,000, it will increase the partnership's assets by $8,000. As no bonus is paid to any partner, the capital balances of Shaun and Rick will remain the same. Hence, the total equity of the partnership will also increase by $8,000. Therefore, both assets and equity will increase by $8,000.

Quiz 12: Partnerships

Which of the following is true of ownership changes in a partnership?

Frank and Harry are partners. Frank has a capital balance of $51,000 and Harry has a capital balance of $40,000. Bill invested a building worth $27,000 to the partnership for an ownership interest of 20%. Calculate Bill's capital in the new partnership.

Sarah and Jane formed a partnership with capital contributions of $210,000 and $123,000, respectively. Peter contributed $86,000 to acquire an ownership interest of 12% in the new partnership. How much is the total bonus for the existing partners?

Keith and Jim are partners. Keith has a capital balance of $49,000 and Jim has a capital balance of $38,000. Bill invested $33,000 to acquire an ownership interest of 30%. Which of the following statements is true of this transaction?

Which of the following is true when a new partner is admitted by purchasing an existing partner's interest?

Dominic and Morgan are partners. Dominic has a capital balance of $360,000 and Morgan has a capital balance of $225,000. Morgan sells $125,000 of his ownership to Lance. Which of the following is true of the items in balance sheet?

Raul and Bianca are partners. Raul has a capital balance of $50,000 and Bianca has a capital balance of $37,000. Bianca sells half of her ownership interest to Bill for $20,500. Which of the following is true of the journal entry to record this transaction?

Allan and Ralph are partners. Allan has a capital balance of $92,000 and Ralph has a capital balance of $75,000. Carol invested $60,000 to acquire an ownership interest of $50,000. Which of the following is true of the impact of the transaction on the balance sheet?

Keith and Jim are partners. Keith has a capital balance of $47,000 and Jim has a capital balance of $32,000. Jim sells $15,000 of his ownership to Bill. Which of the following is true of the journal entry to admit Bill?

Keith and Jim are partners. Keith has a capital balance of $51,000 and Jim has a capital balance of $39,000. Bill invested a building worth $27,000 to the partnership for an ownership interest of 20%. How much is the total bonus for the existing partners?

Issac and Karl are partners. Issac has a capital balance of $25,000 and Karl has a capital balance of $20,000. Bill invested $15,000 to acquire an ownership interest of 30%. How does this transaction affect the balance sheet items?