Partnerships - Formation and Operations Part 2

Psrt 2 - Partnerships: Formation and Operations 26. What was Young's total share of net loss for the first year? A. $3,900 loss. B. $11,700 loss. C. $10,400 loss. D. $24,700 loss. E. $9,100 loss. 27. What was Eaton's total share of net loss for the first year? A. $3,900 loss. B. $11,700 loss. C. $10,400 loss. D. $24,700 loss. E. $9,100 loss. 28. What was Thurman's total share of net loss for the first year? A. $3,900 loss. B. $11,700 loss. C. $10,400 loss. D. $24,700 loss. E. $9,100 loss. 29. What was the balance in Young's Capital account at the end of the first year? A. $120,900. B. $118,300. C. $126,100. D. $80,600. E. $111,500. 30. What was the balance in Eaton's Capital account at the end of the first year? A. $120,900. B. $118,300. C. $126,100. D. $80,600. E. $111,500. 31. What was the balance in Thurman's Capital account at the end of the first year? A. $120,900. B. $118,300. C. $126,100. D. $80,600. E. $111,500. 32. What was Young's total share of net income for the second year? A. $17,160 income. B. $4,160 income. C. $19,760 income. D. $17,290 income. E. $28,080 income. 33. What was Eaton's total share of net income for the second year? A. $17,160 income. B. $4,160 income. C. $19,760 income. D. $17,290 income. E. $28,080 income. 34. What was Thurman's total share of net income for the second year? A. $17,160 income. B. $4,160 income. C. $19,760 income. D. $17,290 income. E. $28,080 income. 35. What was the balance in Young'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. 36. 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. What was the balance in Thurman'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. 38. Which of the following is not a characteristic of a partnership? A. The partnership itself pays no income taxes. B. It is easy to form a partnership. C. Any partner can be held personally liable for all debts of the business. D. A partnership requires written Articles of Partnership. E. Each partner has the power to obligate the partnership for liabilities. 39. Partnerships have alternative legal forms including all of the following except: A. General Partnership. B. Limited Partnership. C. Subchapter S Partnership. D. Limited Liability Partnership. E. Limited Liability Company. 40. Which of the following type of organization is classified as a partnership, or similar to a partnership, for tax 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 can 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. 43. The partnership contract for Hanes and Jones LLP provides that Hanes is to receive a bonus of 20% of net income (after the bonus) and that the remaining net income is to be divided equally. If the partnership income before the bonus for the year is $57,600, Hanes' share of this pre-bonus income is: A. $28,800. B. $33,600. C. $34,560. D. $35,520. E. $38,400. Bonus = .20(NI-Bonus)= (.20NI)-(.20Bonus). 1.2Bonus=$11,520. Bonus=$9,600. Remainder to share equally = $48,000. Hanes receives $24,000+$9,600 = $33,600 44. The partners of Apple, Bere, and Carroll LLP share net income and losses in a 5:3:2 ratio, respectively. The capital account balances on January 1, 2011, were as follows: The carrying amounts of the assets and liabilities of the partnership are the same as their current fair values. Dorr will be admitted to the partnership with a 20% capital interest and a 20% share of net income and losses in exchange for a cash investment. The amount of cash that Dorr should invest in the partnership is: A. $25,000. B. $30,000. C. $37,500. D. $75,000. E. $90,000. ($150,000/.8=$187,500. $187,500 - $150,000 = $37,500 to invest) 45. The appropriate format of the December 31, 2010 closing entry for John & Hope Limited Liability Partnership, whose two partners had withdrawn their salaries from the partnership during the year is: A. A Above. B. B Above. C. C Above. D. D Above. 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. ($80,000 - $60,000) 3 = $6,667 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. Land will be recorded at the fair value of $45,000. The capital account balances for Donald & Hanes LLP on January 1, 2011, 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. 48. What is the balance of May's capital account after the new partnership is created? A. $84,000. B. $100,000. C. $140,000. D. $176,000. E. $200,000. 49. What is the balance of Donald's capital account after the new partnership is created? A. $84,000. B. $100,000. C. $140,000. D. $176,000. E. $200,000.