Answer the following Questions:
1. Tomas and Saturn are partners who share income in the ratio of 3:1. Their capital balances are $40,000 and $60,000 respectively. Income Summary has a credit balance of $20,000. What is Saturn's capital balance after closing Income Summary to Capital?
1. $65,000
2. $55,000
3. $45,000
4. $75,000
2. When a limited partnership is formed
1. all partners have limited liability
2. none of the partners have limited liability
3. the partnership activities are limited
4. some of the partners have limited liability
3. Xavier and Yolanda have original investments of $50,000 and $100,000 respectively in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 10%, salary allowances of $38,000 and $28,000 respectively, and the remainder equally. How much of the net income of $75,000 is allocated to Xavier?
1. $66,000
2. $43,000
3. $40,000
4. $35,000
4. Alpha and Beta are partners who share income in the ratio of 1:2 and have capital balances of $40,000 and $70,000 at the time they decide to terminate the partnership. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $50,000. What amount of loss on realization should be allocated to Alpha?
1. $20,000
2. $50,000
3. $30,000
4. $60,000
5. Adriana and Belen are partners who share income in the ratio of 3:2 and have capital balances of $50,000 and $90,000 at the time they decide to terminate the partnership. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $90,000. How much cash should be distributed to Adriana?
1. $45,000
2. $30,000
3. $50,000
4. $20,000
6. Robert Johnson contributed equipment, inventory, and $42,000 cash to the partnership. The equipment had a book value of $25,000 and market value of $28,000. The inventory has a book value of $50,000, but only had a market value of $15,000. due to obsolescence. The partnership also assumed a $12,000 note payable owed by Robert that was originally used to purchase the equipment.
What amount should Robert's capital account be recorded?
1. $105,000
2. $117,000
3. $73,000
4. $85,000
7. Benton and Orton are partners who share income in the ratio of 1:3 and have capital balances of $70,000 and $30,000 respectively. Ramsey is admitted to the partnership and is given a 40% interest by investing $20,000. What is Benson's capital balance after admitting Ramsey?
1. $70,000
2. $20,000
3. $7,000
4. $63,000
8. The capital accounts of Harrison and Marti have balances of $180,000 and $130,000, respectively, on January 1, 2010, the beginning of the current fiscal year. On April 10, Harrison invested an additional $20,000. During the year, Harrison and Marti withdrew $96,000 and $78,000, respectively, and net income for the year was $248,000. The articles of partnership make no reference to the division of net income.
Based on this information, the statement of partners' equity for the 2010 for the partnership would show what amount in as total capital for the partnership on December 31, 2010?
1. $752,000
2. $176,000
3. $228,000
4. $404,000
9. Partner A has a capital balance of $20,000 and devotes full time to the partnership. Partner B has a capital balance of $30,000 and devotes half time to the partnership. In what ratio is net income to be divided?
1. 1:2
2. 3:5
3. 2:3
4. 1:1
10. Which of the following is a disadvantage of a partnership when compared to a corporation?
1. The partnership is more likely to have a net loss.
2. The partnership has limited life.
3. The partnership is less expensive to organize.
4. The partnership is easier to organize.
11. When a new partner is admitted to a partnership, there should be a(n)
1. the cash received by the current partner represents the amount of the debit to that partner's capital account.
2. new capital account is added to the ledger for the new partner
3. the total assets of the partnership increase
4. the total owner's equity of the partnership increases
12. Immediately prior to the admission of Abbott, the Smith-Jones Partnership assets had been adjusted to current market prices, and the capital balances of Smith and Jones were $40,000 and $60,000 respectively. If the parties agree that the business is worth $120,000, what is the amount of bonus that should be recognized in the accounts at the admission of Abbott?
1. $80,000
2. $20,000
3. $40,000
4. $60,000
13. A new partner may be admitted to a partnership by
1. contributing assets to the partnership
2. purchasing a specific quantity of assets from the partnership
3. inheriting a partnership interest
4. the consent of the majority of the current partners
14. Which of the following below is not a characteristic of a Limited Liability Company?
1. file articles of organization with the state government
2. avoids mutual agency
3. limited life
4. limited liability
15. The Calvin-Dogwood Partnership owns inventory that was purchased for $65,000, has a current replacement cost of $64,500, and is priced to sell for $95,000. At what amount should the inventory be recorded in the accounts of the new partnership if Alexis is to be admitted?
1. $97,000
2. $64,500
3. $95,000
4. $65,000
16. Nick is admitted to an existing partnership by investing cash. Nick agrees to pay a bonus for his ownership interest because of the past success of the partnership. When Nick's investment in the partnership is recorded
1. his capital account will be credited for the amount of cash he invested
2. his capital account will be credited for more than the cash he invested
3. a bonus will be credited for the amount of cash he invested
4. a bonus will be distributed to the old partners' capital accounts.
17. Everett, Miguel, and Ramona are partners, sharing income 1:2:3. After selling all of the assets for cash, dividing losses on realization, and paying liabilities, the balances in the capital accounts are as follows: Everett, $50,000 Cr.; Miguel, $20,000 Cr.; and Ramona, $30,000 Dr. Assume that after the available cash is distributed to the partners, Ramona pays $15,000 of the deficiency to the firm. How much of the $15,000 should be distributed to Everett?
1. $0
2. $10,000
3. $5,000
4. $15,000
18. Partners Ken and Macki each have a $40,000 capital balance and share income and losses in a 3:2. Cash equals $20,000, noncash assets equal $120,000, and liabilities equal $60,000. If the noncash assets are sold for $80,000, the Macki's capital account will
1. decrease by $16,000.
2. decrease by $40,000.
3. increase by $24,000.
4. decrease by $24,000.
19. Xavier and Yolanda have original investments of $50,000 and $100,000 respectively in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 10%, salary allowances of $27,000 and $18,000 respectively, and the remainder equally. How much of the net loss of $6,000 is allocated to Yolanda?
1. $0
2. $3,000
3. $1,000
4. $5,000
20. Partners Ken and Macki each have a $40,000 capital balance and share income and losses in a 3:2. Cash equals $20,000, noncash assets equal $120,000, and liabilities equal $60,000. If the noncash assets are sold for $60,000, and both partners agree to make up an capital deficits with personal cash contributions, Partner Macki will eventually receive cash of
1. $4,000.
2. $24,000.
3. $0.
4. $16,000.