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Exam 12: Accounting for Partnerships and Limited Liability Companies

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Question 81

Multiple Choice

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Details of the division of net income for a partnership should be disclosed in the

A) Assets section of the balance sheet
B) partners' subsidiary ledger
C) statement of cash flows
D) partnership income statement

E) None of the above
F) A) and B)

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Question 82

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A disadvantage of partnerships is the mutual agency of all partners.

A) True
B) False

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Question 83

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After all noncash assets have been converted to cash and all liabilities paid,A,B,and C have capital balances of $10,000 (debit),$5,000 (debit),and $25,000 (credit).The cash available for distribution to the partners is $10,000.

Match each statement to the appropriate term (a-h) : -Business owned by a single individual

Sarno has a capital balance of $42,000 after adjusting the assets to fair market value.Minton contributes $22,000 to receive a 30% interest in the new partnership.The bonus paid by Minton is $2,800.

The salary allocation to partners used in dividing net income would also appear as salary expense on the partnership income statement.

Match each statement to the appropriate term (a-h) . -A voluntary association of two or more persons who co-own a business for profit

Jackson and Campbell have capital balances of $100,000 and $300,000 respectively.Jackson devotes full time and Campbell one-half time to the business.Determine the division of $120,000 of net income under each of the following assumptions:

If the net income of a partnership is less than the total of the allowances provided by the partnership agreement,the difference must be divided among the partners in the income-sharing ratio.

Match each statement to the appropriate term (a-h) . -Every partner can bind the business to a contract within the scope of the partnership's regular business operations

Benson and Orton are partners who share income in the ratio of 2:3 and have capital balances of $60,000 and $40,000,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?

-Soledad and Winston are partners who share income in the ratio of 1:3 and have capital balances of $100,000 and $140,000,respectively,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 $130,000.What amount of loss on realization should be allocated to Soledad?

A partner withdraws from a partnership by selling her interest to another person who currently is not associated with the firm.As a result of this transaction,the capital account balance of the other partners in the partnership

What amount will be recorded to Kelsey's capital account?

When a limited liability company is formed,

Gavin invested $45,000 in the Jason and Kelly Partnership for ownership equity of $45,000.Prior to the investment,land was revalued to a market value of $320,000 from a book value of $200,000.Jason and Kelly share net income in a 1:2 ratio. (a) Provide the journal entry for the revaluation of land. (b) Provide the journal entry to admit Gavin.

Tanner and Teresa share income and losses in a 2:1 ratio after allowing for salaries of $42,000 to Tanner and $60,000 to Teresa.Net income of the partnership is $132,000.Income should be divided as follows:

Use the information below to answer the questions that follow. ​ The capital accounts of Harrison and Marti have balances of $160,000 and $110,000, respectively, on January 1, 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 $264,000. The articles of partnership make no reference to the division of net income.​ -Based on this information,the statement of partners' equity would show what amount as total capital for the partnership on December 31?

What amount will be recorded to Sandra's capital account?

Alpha and Beta are partners who share income in the ratio of 1:2 and have capital balances of $40,000 and $70,000,respectively,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?