Question :
71. When a partnership liquidated:
A. Noncash assets converted to cash.
B. Any gain or : 1225253
71. When a partnership is liquidated:
A. Noncash assets are converted to cash.
B. Any gain or loss on liquidation is allocated to the partners’ capital accounts using the income and loss sharing ratio.
C. Liabilities are paid or settled.
D. Any remaining cash is distributed to the partners based on their capital balances.
E. All of these.
72. 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.
73. 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.
74. Sam, Bart, and Lex 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 Sam, $45,000; Bart, $37,000; and Lex, $(5,000). After all assets are sold and liabilities are paid, there is $77,000 in cash to be distributed. Lex is unable to pay the deficiency. The journal entry to record the distribution should be:
A. Debit Sam, Capital $25,667; debit Bart, Capital $25,667; debit Lex, Capital $25,666; credit Cash $77,000.
B. Debit Sam, Capital $42,500; debit Bart, Capital $34,500; credit Cash $77,000.
C. Debit Sam, Capital $45,000; debit Bart, Capital $37,000; credit Lex, Capital $5,000; credit Cash $77,000.
D. Debit Cash $77,000, debit Lex, Capital $5,000, credit Sam, Capital $45,000, credit Bart, Capital $37,000.
E. Debit Cash $77,000; credit Sam, Capital $25,667; credit Bart, Capital $25,667; credit Lex, Capital $25,666.
75. Badger and Fox are forming a partnership. Badger invests a building that has a market value of $350,000; the partnership assumes responsibility for a $125,000 note secured by a mortgage on the property. Fox invests $100,000 in cash and equipment that has a market value of $75,000. For the partnership, the amounts recorded for the building and for Badger’s Capital account are:
A. Building $350,000; Badger, Capital $350,000.
B. Building $225,000; Badger, Capital $225,000.
C. Building $225,000; Badger, Capital $125,000.
D. Building $350,000; Badger, Capital $225,000.
E. Building $350,000; Badger, Capital $300,000.
76. Badger and Fox are forming a partnership. Badger invests a building that has a market value of $350,000; the partnership assumes responsibility for a $125,000 note secured by a mortgage on the property. Fox invests $100,000 in cash and equipment that has a market value of $75,000. For the partnership, the amounts recorded for Badger’s Capital account and for Fox’s Capital account are:
A. Badger, Capital $350,000; Fox, Capital $175,000.
B. Badger, Capital $225,000; Fox, Capital $100,000.
C. Badger, Capital $225,000; Fox, Capital $75,000.
D. Badger, Capital $350,000; Fox, Capital $100,000.
E. Badger, Capital $225,000; Fox, Capital $175,000.
77. Badger and Fox are forming a partnership. Badger invests a building that has a market value of $350,000; the partnership assumes responsibility for a $125,000 note secured by a mortgage on the property. Fox invests $100,000 in cash and equipment that has a market value of $75,000. For the partnership, the amounts recorded for total assets and for total capital account are:
A. Total assets $525,000; total capital $400,000.
B. Total assets $400,000; total capital $400,000.
C. Total assets $650,000; total capital $650,000.
D. Total assets $400,000; total capital $525,000.
E. Total assets $525,000; total capital $525,000.
78. Smith, West, and Krug form a partnership. Smith contributes $180,000, West contributes $150,000, and Krug contributes $270,000. Their partnership agreement calls for the income or loss division to be based on the ratio of capital invested. If the partnership reports income of $175,000 for its first year, what amount of income is credited to Smith’s capital account?
A. $43,750.
B. $78,750.
C. $52,500.
D. $58,333.
E. $60,000.
79. Smith, West, and Krug form a partnership. Smith contributes $180,000, West contributes $150,000, and Krug contributes $270,000. Their partnership agreement calls for the income or loss division to be based on the ratio of capital invested. If the partnership reports income of $175,000 for its first year, what amount of income is credited to Krug’s capital account?
A. $43,750.
B. $78,750.
C. $52,500.
D. $58,333.
E. $60,000.
80. Smith, West, and Krug form a partnership. Smith contributes $180,000, West contributes $150,000, and Krug contributes $270,000. Their partnership agreement calls for a 5% interest allowance on the partner’s capital balances with the remaining income or loss to be allocated equally. If the partnership reports income of $174,000 for its first year, what amount of income is credited to West’s capital account?
A. $58,000.
B. $57,000.
C. $61,500.
D. $55,500.
E. $48,000.
