Question :
65. Brown invested $200,000 and Freeman invested $150,000 in a : 1257549
65. Brown invested $200,000 and Freeman invested $150,000 in a partnership. They agreed to 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 $205,000 in income are:
A. $102,500 to Brown; $102,500 to Freeman.
B. $117,143 to Brown; $87,857 to Freeman.
C. $122,500 to Brown; $82,500 to Freeman.
D. $105,000 to Brown; $100,000 to Freeman.
E. $112,750 to Brown; $92,250 to Freeman.
66. The partnership agreement for Wilson,Pickett &Nelson, a general partnership, provided that profits be shared between the partners in the ratio of their financial contributions to the partnership. Wilson contributed $100,000, Pickett contributed $50,000 and Nelson contributed $50,000. In the partnership’s first year of operation, it incurred a loss of $110,000. What amount of the partnership’s loss, rounded to the nearest dollar, should be absorbed by Nelson?
A. $50,000
B. $27,500
C. $36,667
D. $0
E. $40,000
67. Olivia Greer is a partner in Made for You. An analysis of Greer’s capital account indicates that during the most recent year, she withdrew $30,000 from the partnership. Her share of the partnership’s net loss was $16,000 and she made an additional equity contribution of $10,000. Her capital account ended the year at $150,000. What was her capital balance at the beginning of the year?
A. $154,000
B. $170,000
C. $180,000
D. $186,000
E. $196,000
68. The following information is available on TGR Enterprises, a partnership, for the most recent fiscal year:
Total partnership capital at beginning of the year$180,000
Partnership net income for the year$150,000
Withdrawals by partners during the year$120,000
Additional investments by partners during the year$ 60,000
There are three partners in TGR Enterprises: Tracey, Gregory and Rodgers. At the end of the year, the partners’ capital accounts were in the ratio of 2:1:2, respectively. Compute the ending capital balances of the three partners.
A. Tracey = $108,000; Gregory = $54,000; Rodgers = $108,000.
B. Tracey = $90,000; Gregory = $90,000; Rodgers = $90,000.
C. Tracey = $204,000; Gregory = $102,000; Rodgers = $204,000.
D. Tracey = $84,000; Gregory = $102,000; Rodgers = $84,000.
E. Tracey = $60,000; Gregory = $30,000; Rodgers = $60,000.
69. The following information is available on PDC Enterprises, a partnership, for the most recent fiscal year:
Total partnership capital at beginning of the year$1,080,000
Partnership net income for the year$1,250,000
Withdrawals by partners during the year$ 320,000
Additional investments by partners during the year$ 70,000
There are three partners in TGR Enterprises: Pearson, Darling and Cathay. At the end of the year, the partners’ capital accounts were in the ratio of 2:2:1, respectively. Compute the ending capital balances of Cathay.
A. $466,000.
B. $402,000.
C. $416,000.
D. $544,000.
E. $388,000.
70. A partner can withdraw from a partnership by any of the following means except:
A. Selling his/her interest to another person for cash.
B. Selling his/her interest to another person in exchange for assets.
C. Receiving cash from the partnership in the amount of his/her interest.
D. Receiving assets from the partnership in the amount of his/her interest.
E. Close the business and liquidate the assets under the mutual agency principle.
71. A bonus may be paid in all of the following situations except:
A. By a new partner when the current value of a partnership is greater than the recorded amounts of equity.
B. By a withdrawing partner to remaining partners if the recorded value of the equity is overstated.
C. To a new partner with exceptional talents.
D. By remaining partners to a withdrawing partner if the recorded equity is understated.
E. By an existing partner to him or herself when in need of personal cash flow.
72. When a partner is added to a partnership:
A. The previous partnership ends.
B. The underlying business operations end.
C. The underlying business operations must close and then re-open.
D. The partnership must continue.
E. The partnership equity always increases.
73. A partnership recorded the following journal entry:
Cash 60,000
B. Founder, Capital 10,000
R. Aqui, Capital 10,000
H. Joiner, Capital…………………………………………….. 80,000
This entry reflects:
A. Acceptance of a new partner who invests $60,000 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 Founder and Aqui.
E. Withdrawal of $10,000 each by Founder and Aqui upon the admission of a new partner.
74. 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 sells his interest to Whitney for $45,000 after the other two partners approve Whitney as partner is:
A. Debit Edison, Capital $45,000; credit Whitney, Capital $45,000.
B. Debit Edison, Capital $40,000; credit Cash $40,000.
C. Debit Edison, Capital $40,000; debit Wright, Capital $2,500; debit Bell, Capital $2,500; credit Whitney, Capital $45,000.
D. Debit Edison, Capital $40,000; credit Whitney, Capital $40,000.
E. Debit Edison, Capital $40,000; debit Cash $5,000; credit Whitney, Capital $45,000.
