Question : 61. Shelby and Mortonson formed a partnership with capital contributions of : 1256283

 

 

61. Shelby and Mortonson formed a partnership with capital contributions of $300,000 and $400,000, respectively. Their partnership agreement calls for Shelby to receive a $60,000 per year salary. Also, each partner is to receive an interest allowance equal to 10% of a partner’s beginning capital investments. The remaining income or loss is to be divided equally. If the net income for the current year is $135,000, then Shelby and Mortonson’s respective shares are: A. $67,500; $67,500B. $92,500; $42,500C. $57,857; $77,143D. $90,000; $40,000E. $35,000; $100,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

62. Shelby and Mortonson formed a partnership with capital contributions of $300,000 and $400,000, respectively. Their partnership agreement calls for Shelby to receive a $60,000 per year salary. Also, each partner is to receive an interest allowance equal to 10% of a partner’s beginning capital investments. The remaining income or loss is to be divided equally. If the net income for the current year is $125,000, then Shelby and Mortonson’s respective shares are: A. $62,500; $62,500B. $90,000; $35,000C. $87,500; $37,500D. $85,000; $40,000E. $92,000; $33,000

 

 

 

 

63. Which of the following statements is true? A. Partners are employees of the partnership.B. Salaries to partners are expenses on the partnership income statement.C. Salary allowances usually reflect the relative value of services provided by partners.D. Salary allowances are expenses.E. Interest allowances are expenses.

 

 

 

 

 

64. Nguyen invested $100,000 and Hansen invested $200,000 in a partnership. They agreed to share income and loss by allowing a $60,000 per year salary allowance to Nguyen and a $40,000 per year salary allowance to Hansen, plus an interest allowance on the partners’ beginning-year capital investments at 10%, with the balance to be shared equally. Under this agreement, the shares of the partners when the partnership earns a $105,000 in income are: A. $52,500 to Nguyen; $52,500 to Hansen.B. $35,000 to Nguyen; $70,000 to Hansen.C. $57,500 to Nguyen; $47,500 to Hansen.D. $42,500 to Nguyen; $62,500 to Hansen.E. $70,000 to Nguyen; $60,000 to Hansen.

 

 

 

 

 

 

 

65. During 2013, Carpenter invested $75,000 and DiAngelo invested $90,000 in a partnership. They agreed to share income and loss by allowing a $40,000 per year salary allowance to Carpenter and a $42,000 per year salary allowance to DiAngelo, plus an interest allowance on the partners’ beginning-year capital investments at 8%, with the balance to be shared equally. Under this agreement, if the partnership earns net income of $300,000 during 2013 the income allocated to each partner is: A. $40,000 to Carpenter; $42,000 to DiAngelo.B. $148,400 to Carpenter; $151,600 to DiAngelo.C. $43,200 to Carpenter; $45,360 to DiAngelo.D. $150,000 to Carpenter; $150,000 to DiAngelo.E. $105,720 to Carpenter; $105,720 to DiAngelo.

 

 

 

 

 

66. During 2013, Schmidt invested $75,000 and Baldwin invested $90,000 in a partnership. They agreed that  Baldwin would get a salary allowance of $30,000 and they would share any remaining income or loss equally. During 2013 the partnership earned net income of $300,000 and they each withdrew $12,000 from the partnership. Which of the following statements is correct? A. Schmidt Capital at the end of 2013 is $213,000.

B. Schmidt Capital at the end of 2013 is $210,000.

C. Baldwin Capital at the end of 2013 is $243,000.

D. Baldwin Capital at the end of 2013 is $255,000.

E. Total Capital at the end of 2013 has increased by $300,000.

 

 

 

 

67. When a partner is added to a partnership: A. The previous partnership ends.B. The underlying business operations ends.C. The underlying business operations must close and then reopen.D. The partnership must continue.E. The partnership equity always increases.

 

 

 

 

 

 

68. A partnership recorded the following journal entry: 

Cash…………………………………..

70,000

 

B. Tanner, Capital……………….

10,000

 

R. Jackson, Capital………………

10,000

 

H. Rivera, Capital……………

 

90,000

This entry reflects: A. Acceptance of a new partner who invests $70,000 and receives a $20,000 bonus.B. Withdrawal of a partner who pays a $10,000 bonus to each of the other partners.C. Addition of a partner who pays a bonus to each of the other partners.D. Additional investment into the partnership by Tanner and Jackson.E. Withdrawal of $10,000 each by Tanner and Jackson upon the admission of a new partner.

 

 

 

 

69. Groh and Jackson are partners. Groh’s capital balance in the partnership is $64,000 and Jackson’s capital balance is $61,000. Groh and Jackson have agreed to share equally in income or loss. Groh and Jackson agree to accept Block with a 20% interest. Block will invest $35,000 in the partnership. The bonus that is granted to Groh and Jackson equals: A. $1,500 each.B. $1,875 each.C. $3,750 each.D. $1,920 to Groh; $1,830 to Jackson.E. $0, because Groh and Jackson actually grant a bonus to Block.

 

 

 

 

 

70. Groh and Jackson are partners. Groh’s capital balance in the partnership is $64,000 and Jackson’s capital balance is $61,000. Groh and Jackson have agreed to share equally in income or loss. Groh and Jackson agree to accept Block with a 25% interest. Block will invest $35,000 in the partnership. The bonus that is granted to Block equals: A. $5,000.B. $2,500.C. $6,667.D. $3,333.E. $0, because Block must actually grant a bonus to Groh and Jackson.