Question : 75.Wright, Bell, and Edison partners and share income in a : 1236409

75.Wright, Bell, and Edison are partners and share income in a 2:5:3 ratio. The partnership’s capital balances are as follows: Wright, $33,000, Bell $27,000 and Edison $40,000. Edison decides to withdraw from the partnership, and the partners agree not to revalue the assets upon Edison’s retirement. The journal entry to record Edison’s June 1 withdrawal from the partnership if Edison is paid $40,000 for his equity is:   

A.Debit Edison, Capital $40,000; credit Cash $40,000.

B.Debit Wright, Capital $20,000; Debit Bell, Capital $20,000; credit Cash $40,000.

C.Debit Wright, Capital $20,000; Debit Bell, Capital $20,000; credit Edison, Capital $40,000.

D.Debit Edison, Capital $40,000; credit Wright, Capital $20,000; credit Bell, Capital $20,000.

E.Debit Cash $40,000; credit Edison, Capital $40,000.

76.Hewlett and Martin are partners. Hewlett’s capital balance in the partnership is $64,000, and Martin’s capital balance $67,000. Hewlett and Martin have agreed to share equally in income or loss. The existing partners agree to accept Black with a 20% interest. Black will invest $35,000 in the partnership. The bonus that is granted to Hewlett and Martin equals:   

A.$900 each.

B.$1,500 each.

C.$600 each.

D.600 to Hewlett; $900 to Martin.

E.$0, because Hewlett and Martin actually grant a bonus to Black.

77.Hewlett and Martin are partners. Hewlett’s capital balance in the partnership is $64,000, and Martin’s capital balance $61,000. Hewlett and Martin have agreed to share equally in income or loss. Hewlett and Martin agree to accept Black with a 25% interest. Black will invest $35,000 in the partnership. The bonus that is granted to Black equals:   

A.$5,000.

B.$2,500.

C.$6,667.

D.$3,333.

E.$0, because Black must actually grant a bonus to Hewlett and Martin.

78.Masters, Hardy, and Rowen are dissolving their partnership. Their partnership agreement allocates income and losses equally among the partners. The current period’s ending capital account balances are Masters, $15,000; Hardy, $15,000; Rowen, $(2,000). After all the assets are sold and liabilities are paid, but before any contributions to cover any deficiencies, there is $28,000 in cash to be distributed. Rowen pays $2,000 to cover the deficiency in his account. The general journal entry to record the final distribution would be:    

A.Debit Masters, Capital $15,000; debit Hardy, Capital $15,000; credit Cash $30,000.

B.Debit Masters, Capital $14,000; debit Hardy, Capital $14,000; credit Cash $28,000.

C.Debit Masters, Capital $15,000; debit Hardy, Capital $15,000; credit Rowen, Capital $2,000; credit Cash $28,000.

D.Debit Cash $28,000; debit Rowen, Capital $2,000; credit Masters, Capital $15,000; credit Hardy, Capital $15,000.

E.Debit Masters, Capital $9,334; debit Hardy, Capital $9,333; debit Rowen, Capital $9,333; credit Cash $28,000.

79.Masters, Hardy, and Rowen are dissolving their partnership. Their partnership agreement allocates income and losses equally among the partners. The current period’s ending capital account balances are Masters, $15,000; Hardy, $15,000; Rowen, $30,000. After all the assets are sold and liabilities are paid, but before any contributions to cover any deficiencies, there is $54,000 in cash to be distributed. The general journal entry to record the final distribution would be:    

A.Debit Masters, Capital $18,000; debit Hardy, Capital $18,000; debit Rowen, Capital $18,000; credit Cash $54,000.

B.Debit Masters, Capital $13,500; debit Hardy, Capital $13,500; debit Rowen, Capital $27,000; credit Cash $54,000.

C.Debit Masters, Capital $15,000; debit Hardy, Capital $15,000; debit Rowen, Capital $30,000; credit Gain from Liquidation $6,000; credit Cash $54,000.

D.Debit Cash $54,000; credit Rowen, Capital $13,500; credit Masters, Capital $13,500; credit Hardy, Capital $27,000.

E.Debit Masters, Capital $15,000; debit Hardy, Capital $15,000; debit Rowen, Capital $30,000; credit Retained Earnings $6000; credit Cash $54,000.

80.When a partnership is liquidated:   

A.Noncash assets are distributed to partners.

B.Any gain or loss on liquidation is allocated to the partner with the highest capital account balance.

C.Liabilities are paid or settled.

D.Any remaining cash is distributed to the partners equally.

E.The business may continue to operate.

81.A capital deficiency means that:   

A.The partnership has a loss.

B.The partnership has more liabilities than assets.

C.At least one partner has a debit balance in his/her capital account.

D.At least one partner has a credit balance in his/her capital account.

E.The partnership has been sold at a loss.

82.When a partner is unable to pay a capital deficiency:   

A.The partner must take out a loan to cover the deficient balance.

B.The deficiency is absorbed by the remaining partners before distribution of cash.

C.The partnership ends before distribution of cash.

D.The deficient partner is relieved of the liability.

E.The remaining partners must wait for the deficiency to be paid before cash is distributed.

83.Henry, Luther, and Gage are dissolving their partnership. Their partnership agreement allocates each partner 1/3 of all income and losses. The current period’s ending capital account balances are Henry, $45,000; Luther, $37,000; and Gage, $(5,000). After all assets are sold and liabilities are paid, there is $77,000 in cash to be distributed. Gage is unable to pay the deficiency. The journal entry to record the distribution should be:    

A.Debit Henry, Capital $25,667; debit Luther, Capital $25,667; debit Gage, Capital $25,666; credit Cash $77,000.

B.Debit Henry, Capital $42,500; debit Luther, Capital $34,500; credit Cash $77,000.

C.Debit Henry, Capital $45,000; debit Luther, Capital $37,000; credit Gage, Capital $5,000; credit Cash $77,000.

D.Debit Cash $77,000, debit Gage, Capital $5,000, credit Henry, Capital $45,000, credit Luther, Capital $37,000.

E.Debit Cash $77,000; credit Henry, Capital $25,667; credit Luther, Capital $25,667; credit Gage, Capital $25,666.

84.Henry, Luther, and Gage are dissolving their partnership. Their partnership agreement allocates each partner 1/3 of all income and losses. The current period’s ending capital account balances are Henry, $45,000; Luther, $37,000; and Gage, $(5,000). After all assets are sold and liabilities are paid, there is $77,000 in cash to be distributed. Gage is unable to pay the deficiency. What amount of cash will Gage receive upon liquidation?    

A.$25,667.

B.$20,667.

C.$30,667.

D.Gage will be invoiced for $5,000.

E.$0.