E. $71,760.
36. A partnership began its first year of operations with the
following capital balances:
Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
The Articles of Partnership stipulated that profits and losses
be assigned in the following manner:
Young was to be awarded an annual salary of $26,000 with
$13,000 salary assigned to Thurman.
Each partner was to be attributed with interest equal to 10%
of the capital balance as of the first day of the year.
The remainder was to be assigned on a 5:2:3 basis to
Young, Eaton, and Thurman, respectively.
Each partner withdrew $13,000 per year.
Assume that the net loss for the first year of operations was
$26,000 with net income of $52,000 in the second year.
What was the balance in Eaton's Capital account at the end
of the second year?
A. $133,380.
B. $84,760.
C. $105,690.
D. $132,860.
E. $71,760.
37. A partnership began its first year of operations with the
following capital balances:
Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
The Articles of Partnership stipulated that profits and losses
be assigned in the following manner:
Young was to be awarded an annual salary of $26,000 with
$13,000 salary assigned to Thurman.
purposes?
(I.) Limited Liability Company
(II.) Limited Liability Partnership
(III.) Subchapter S Corporation
A. II only.
B. II and III.
C. I and II.
D. I and III.
E. I, II, and III.
41. Which of the following statements is correct regarding
the admission of a new partner?
A. A new partner must purchase a partnership interest
directly from the business.
B. The right of co-ownership in the business property can
be transferred to a new partner without the consent of other
existing partners.
C. The right to participate in management of the business
cannot be conveyed without the consent of other existing
partners.
D. The right to share in profits and losses can be sold to a
new partner without the consent of other existing partners.
E. A new partner always pays book value.
42. Withdrawals from the partnership capital accounts are
typically not used
A. to reward partners for work performed in the business.
B. to reduce the partners' capital account balances at the
end of an accounting period.
C. to record interest earned on a partner's capital balance.
D. to reduce the basic investment that has been made in
the business.
E. to record the partnership's payment of a partner's
personal expense such as income tax.
E. Option E
46. When Danny withdrew from John, Daniel, Harry, and
Danny, LLP, he was paid $80,000, although his capital
account balance was only $60,000. The four partners shared
net income and losses equally. The journal entry to record
the effect on John's capital due to Danny's withdrawal would
include:
A. $6,667 debit to John, Capital.
B. $6,667 credit to John, Capital.
C. $20,000 debit to John, Capital.
D. $5,000 debit to John, Capital.
E. $5,000 credit to John, Capital.
47. Max, Jones and Waters shared profits and losses 20%,
40%, and 40% respectively and their partnership capital
balance is $10,000, $30,000 and $50,000 respectively. Max
has decided to withdraw from the partnership. An appraisal
of the business and its property estimates the fair value to be
$200,000. Land with a book value of $30,000 has a fair
value of $45,000. Max has agreed to receive $20,000 in
exchange for her partnership interest after revaluation. At
what amount should land be recorded on the partnership
books?
A. $20,000.
B. $30,000.
C. $45,000.
D. $50,000.
E. $200,000.
48. The capital account balances for Donald & Hanes LLP
on January 1, 2013, were as follows:
Donald and Hanes shared net income and losses in the ratio
of 3:2, respectively. The partners agreed to admit May to the
partnership with a 35% interest in partnership capital and net
B.
C.
D.
E.
$100,000.
$140,000.
$176,000.
$200,000.
51. The capital account balances for Donald & Hanes LLP
on January 1, 2013, were as follows:
Donald and Hanes shared net income and losses in the ratio
of 3:2, respectively. The partners agreed to admit May to the
partnership with a 35% interest in partnership capital and net
income. May invested $100,000 cash, and no goodwill was
recognized.
What is the new total balance of the partnership accounts?
A. $84,000.
B. $140,000.
C. $176,000.
D. $200,000.
E. $400,000.
52. Which of the following could be used as a basis to
allocate profits among partners who are active in the
management of the partnership?
1) allocation of salaries.
2) the number of years with the partnership.
3) the amount of time each partner works.
4) the average capital invested.
A. 1 and 2.
B. 1 and 3.
C. 1, 2, and 4.
D. 1, 3, and 4.
E. 1, 2, 3, and 4.
53. P, L, and O are partners with capital balances of
$50,000, $30,000 and $20,000 and who share in the profit
and loss of the PLO partnership 30%, 20%, and 50%,
C. $110,000.
D. $120,000.
E. $230,000.
59. Peter, Roberts, and Dana have the following capital
balances; $80,000, $100,000 and $60,000, respectively. The
partners share profits and losses 20%, 40%, and 40%
respectively.
What is the total partnership capital after Roberts retires
receiving $160,000 and using the goodwill method?
A. $290,000.
B. $176,000.
C. $80,000.
D. $120,000.
E. $230,000.
60. Donald, Anne, and Todd have the following capital
balances; $40,000, $50,000 and $30,000 respectively. The
partners share profits and losses 20%, 40%, and 40%
respectively.
Anne retires and is paid $80,000 based on an independent
appraisal of the business. If the goodwill method is used,
what is the capital of the remaining partners?
A. Donald, $55,000; Todd, $60,000
B. Donald, $40,000; Todd, $30,000
C. Donald, $65,000; Todd, $55,000
D. Donald, $15,000; Todd, $30,000
61. Donald, Anne, and Todd have the following capital
balances; $40,000, $50,000 and $30,000 respectively. The
partners share profits and losses 20%, 40%, and 40%
respectively.
Anne retires and is paid $80,000 based on the terms of the
original partnership agreement. If the bonus method is used,
what is the capital of the remaining partners?
A.
B.
C.
D.
B.
C.
D.
E.
$46,800.
$40,000.
$42,400.
$43,100.
D. Option D
E. Option E
8. The Henry, Isaac, and Jacobs partnership was about to
enter liquidation with the following account balances:
Estimated expenses of liquidation were $5,000. Henry,
Isaac, and Jacobs shared profits and losses in a ratio of
2:4:4.
What amount of cash was available for safe payments,
based on the above information?
A. $30,000.
B. $85,000.
C. $25,000.
D. $35,000.
E. $40,000.
9. The Henry, Isaac, and Jacobs partnership was about to
enter liquidation with the following account balances:
Estimated expenses of liquidation were $5,000. Henry,
Isaac, and Jacobs shared profits and losses in a ratio of
2:4:4.
Before liquidating any assets, the partners determined the
amount of cash available for safe payments. How should the
amount of safe cash payments be distributed?
A. in a ratio of 2:4:4 among all the partners.
B. $18,333 to Henry and $16,667 to Jacobs.
C. in a ratio of 1:2 between Henry and Jacobs.
D. $15,000 to Henry and $10,000 to Jacobs.
E. $21,667 to Henry and $3,333 to Jacobs.
10. The Henry, Isaac, and Jacobs partnership was about to
enter liquidation with the following account balances:
Estimated expenses of liquidation were $5,000. Henry,
Isaac, and Jacobs shared profits and losses in a ratio of
2:4:4.
E. $15,867.
15. A local partnership was considering the possibility of
liquidation since one of the partners (Ding) was personally
insolvent. Capital balances at that time were as follows.
Profits and losses were divided on a 4:2:2:2 basis,
respectively.
Creditors of partner Ding filed a $25,000 claim against the
partnership's assets. At that time, the partnership held
noncash assets reported at $360,000 and liabilities of
$120,000. There was no cash on hand at the time.
If the assets could be sold for $228,000, what is the
minimum amount that Ding's creditors would have received?
A. $36,000.
B. $0.
C. $2,500.
D. $38,720.
E. $67,250.
16. A local partnership was considering the possibility of
liquidation since one of the partners (Ding) was personally
insolvent. Capital balances at that time were as follows.
Profits and losses were divided on a 4:2:2:2 basis,
respectively.
Creditors of partner Ding filed a $25,000 claim against the
partnership's assets. At that time, the partnership held
noncash assets reported at $360,000 and liabilities of
$120,000. There was no cash on hand at the time.
If the assets could be sold for $228,000, what is the
minimum amount that Laurel's creditors would have
received?
A. $36,000.
B. $0.
C. $2,500.
D. $38,250.
E. $67,250.
17. A local partnership was considering the possibility of
liquidation since one of the partners (Ding) was personally
insolvent. Capital balances at that time were as follows.
Profits and losses were divided on a 4:2:2:2 basis,
respectively.
Creditors of partner Ding filed a $25,000 claim against the
partnership's assets. At that time, the partnership held
noncash assets reported at $360,000 and liabilities of
$120,000. There was no cash on hand at the time.
If the assets could be sold for $228,000, what is the
minimum amount that Ezzard's creditors would have
received?
A. $36,000.
B. $0.
C. $2,500.
D. $38,250.
E. $67,250.
18. A local partnership was considering the possibility of
liquidation since one of the partners (Ding) was personally
insolvent. Capital balances at that time were as follows.
Profits and losses were divided on a 4:2:2:2 basis,
respectively.
Creditors of partner Ding filed a $25,000 claim against the
partnership's assets. At that time, the partnership held
noncash assets reported at $360,000 and liabilities of
$120,000. There was no cash on hand at the time.
If the assets could be sold, for $228,000 what is the
minimum amount that Tillman's creditors would have
received?
A. $36,000.
B. $0.
C. $2,500.
D. $38,250.
E. $67,250.
19. Dancey, Reese, Newman, and Jahn were partners who
shared profits and losses on a 4:2:2:2 basis, respectively.
They were beginning to liquidate their business. At the start
of the process, capital balances were as follows:
Which one of the following statements is true for a
predistribution plan?
A. The first available $16,000 would go to Newman.
B. The first available $20,000 would go to Dancey.
C. The first available $8,000 would go to Jahn.
D. The first available $8,000 would go to Newman.
E. The first available $4,000 would go to Jahn.
20. Dancey, Reese, Newman, and Jahn were partners who
shared profits and losses on a 4:2:2:2 basis, respectively.
They were beginning to liquidate their business. At the start
of the process, capital balances were as follows:
Which one of the following statements is true for a
predistribution plan?
A. The first available $16,000 would go to Newman. The
next $12,000 would go $8,000 to Dancey and $4,000 to
Newman. The following $32,000 would be shared by
Dancey, Reese, and Newman. The total distribution would
be $60,000 before all four partners share any further
payments equally.
B. The first available $16,000 would go to Newman. The
next $12,000 would go $8,000 to Dancey and $4,000 to
Newman. The following $32,000 would be shared by
Dancey, Reese, and Newman. The total distribution would
be $60,000 before all four partners share any further
payments in their profit and loss sharing ratios.
C. The first $20,000 would go to Newman. The next $8,000
would go to Dancey. The next $12,000 would be shared by
E. Option E
31. White, Sands, and Luke has the following capital
balances and profit and loss ratios:
$60,000 (30%); $100,000 (20%); and $200,000 (50%).
The partnership has received a predistribution plan.
How would $200,000 be distributed?
A. Option A
B. Option B
C. Option C
D. Option D
E. Option E
32. A local partnership has assets of cash of $5,000 and a
building recorded at $80,000. All liabilities have been paid.
The partners' capital accounts are as follows Harry $40,000,
Landers $30,000 and Waters 15,000. The partners share
profits and losses 4:4:2.
If the building is sold for $50,000, how much cash will Harry
receive in the final settlement?
A. $5,000.
B. $9,000.
C. $18,000.
D. $28,000.
E. $55,000.
33. A local partnership has assets of cash of $5,000 and a
building recorded at $80,000. All liabilities have been paid.
The partners' capital accounts are as follows Harry $40,000,
Landers $30,000 and Waters 15,000. The partners share
profits and losses 4:4:2.
If the building is sold for $50,000, how much cash will Waters
receive in the final settlement?
A. $5,000.
B. $9,000.
C. $18,000.
D. $28,000.
E. $55,000.
34. A local partnership has assets of cash of $130,000 and
land recorded at $700,000. All liabilities have been paid and
the partners are all personally insolvent. The partners' capital
accounts are as follows Roberts, $500,000, Ferry, $300,000
and Mones, $30,000. The partners share profits and losses
5:3:2.
If the land is sold for $450,000, how much cash will Roberts
receive in the final settlement?
A. $0.
B. $30,000.
C. $217,500.
D. $362,500.
E. $502,500.
35. A local partnership has assets of cash of $130,000 and
land recorded at $700,000. All liabilities have been paid and
the partners are all personally insolvent. The partners' capital
accounts are as follows Roberts, $500,000, Ferry, $300,000
and Mones, $30,000. The partners share profits and losses
5:3:2.
If the land is sold for $450,000, how much cash will Mones
receive in the final settlement?
A. $0.
B. $15,000.
C. $300,000.
D. $217,500.
E. $362,500.