Homework Answers
Question 23) The answer is 'a bonus to the withdrawing partner'
If a withdrawing partner receives assets worth more than the book value of his or her equity, then he/she receives a bonus.
Question 24) The answer is 'procedures for withdrawal of assets by the partners'
The articles of partnership specifies the procedures for withdrawal of assets by the partners
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QUESTION 23 Which of the following occurs if a withdrawing partner receives assets worth more than...
17. A deficient partner A s assumed to be always insolvent B who is solvent and...
17. A deficient partner A s assumed to be always insolvent B who is solvent and has a loan to the st a tes the right of C should inmediately withdraw from the partnership D may invest additional cash The partners did not agree is to how t h e guided then ch should be divided among partners A based on original capital to B arbitrary ratio C equally D. based on ending capital ratio 19. The total partners' equity...
Assume the following information just prior to the withdrawal of Partner X: Assets Liabilities Cash $20,000...
Assume the following information just prior to the withdrawal of Partner X: Assets Liabilities Cash $20,000 50,000 Accounts payable $5,000 Inventory Partners' Capital $10,000 20,000 35,000 X, Capital Y, Capital Z, Capítal 65,000 $70,000 $70,000 Required: Prepare journal entries to record the following unrelated scenarios: 1. Partner X sells his interest to new partner T for $25,000. 2. Partner X sells his interest to partner Y for $30,000. 3. Partner X sells his interest and is paid a share of...
E12-20 Accounting for withdrawal of a partner The O'Hara, Parness, and Lincoln partnership balance sheet reports...
E12-20 Accounting for withdrawal of a partner The O'Hara, Parness, and Lincoln partnership balance sheet reports capital of $50,000 for O'Hara, $125,000 for Parness, and $25,000 for Lincoln. O'Hara is withdraw- ing from the firm. The partners have shared profits and losses in the ratio of 1/2 to O'Hara, 1/4 to Parness, and 1/4 to Lincoln. The partnership agreement states that a withdrawing partner will receive cash equal to the book value of his or her partners' equity. Journalize the...
Answer all HH and נR are fashion designers who agreed to form a partnership to open a dothing store. An attorney prepares the partnership agreement, indicates that assets invested in the partnersh...
Answer all
HH and נR are fashion designers who agreed to form a partnership to open a dothing store. An attorney prepares the partnership agreement, indicates that assets invested in the partnership will be recorded at their fair market value and that liabilities will be assumed at book value. The assets contributed by each partner and the liabilities assumed by the partnership follow. Assets Cash Accounts receivable Allowance for uncollectible accounts Book value Allowance for uncollectible accounts Fair Value Supplies...
Steve Reese is a well-known interior designer in Fort Worth, Texas. He wants to start his...
Steve Reese is a well-known interior designer in Fort Worth, Texas. He wants to start his own business and convinces Rob O’Donnell, a local merchant, to contribute the capital to form a partnership. On January 1, 2016, O’Donnell invests a building worth $108,000 and equipment valued at $60,000 as well as $42,000 in cash. Although Reese makes no tangible contribution to the partnership, he will operate the business and be an equal partner in the beginning capital balances. To entice...
CP 12–3 Assume the following information just prior to the admission of new partner I: Assets...
CP 12–3 Assume the following information just prior to the admission of new partner I: Assets Liabilities Cash 5,000 Accounts Payable 8,000 Accounts Receivables 43,000 Partners’ Capital G, Capital 30,000 H, Capital 10,000 40,000 48,000 48,000 Required: Prepare journal entries to record the following unrelated scenarios: 1. New partner I purchases partners G’s partnership interest for $40,000. 2. New partner I receives a cash bonus of $2,000 and a one-tenth ownership share, allocated equally from the partnership interests of G...
QUESTION 6 Which of the following statements is true in regards to partnerships? Partners are easily...
QUESTION 6 Which of the following statements is true in regards to partnerships? Partners are easily able to limit their liability • Partners cannot normally be involved in the management of the partnership Net assets contributed by partners are recorded at their current market value Partnerships are subject to the same tax rate as companies or trusts QUESTION 7 A partnership capital account is opened for each partner to: Keep track of the partners share of profits Keep track of...
A new incoming partner’s contribution may suggest either the presence of previously unrecorded go...
A new incoming partner’s contribution may suggest either the presence of previously unrecorded goodwill or the appreciation of existing assets but not both. True False Use of the bonus method and use of the goodwill method are mutually exclusive choices True False Under the bonus method, the mew incoming partner’s initial capital balance is equal to that partner’s percentage interest in capital times the book value of the old partnership. True False The goodwill method recognizes increases in asset values...
1. When a partner sells 40% of his interest to an outsider at a selling price...
1. When a partner sells 40% of his interest to an outsider at a selling price that is higher than 40% , A total partnership capitalization is not affected. B. the selling price becomes the new partner's capital balance. C. the new partner will have the same capital balance as the old (selling) partner. D. total partnership capitalization is increased by the amount paid by the new partner. 2. From the following statements, which is NOT TRUE of the division...
Steve Reese is a well-known interior designer in Fort Worth, Texas. He wants to start his...
Steve Reese is a well-known interior designer in Fort Worth, Texas. He wants to start his own business and convinces Rob O’Donnell, a local merchant, to contribute the capital to form a partnership. On January 1, 2016, O’Donnell invests a building worth $128,000 and equipment valued at $136,000 as well as $56,000 in cash. Although Reese makes no tangible contribution to the partnership, he will operate the business and be an equal partner in the beginning capital balances. To entice...
17. A deficient partner A s assumed to be always insolvent B who is solvent and has a loan to the st a tes the right of C should inmediately withdraw from the partnership D may invest additional cash The partners did not agree is to how t h e guided then ch should be divided among partners A based on original capital to B arbitrary ratio C equally D. based on ending capital ratio 19. The total partners' equity...
Assume the following information just prior to the withdrawal of Partner X: Assets Liabilities Cash $20,000 50,000 Accounts payable $5,000 Inventory Partners' Capital $10,000 20,000 35,000 X, Capital Y, Capital Z, Capítal 65,000 $70,000 $70,000 Required: Prepare journal entries to record the following unrelated scenarios: 1. Partner X sells his interest to new partner T for $25,000. 2. Partner X sells his interest to partner Y for $30,000. 3. Partner X sells his interest and is paid a share of...
E12-20 Accounting for withdrawal of a partner The O'Hara, Parness, and Lincoln partnership balance sheet reports capital of $50,000 for O'Hara, $125,000 for Parness, and $25,000 for Lincoln. O'Hara is withdraw- ing from the firm. The partners have shared profits and losses in the ratio of 1/2 to O'Hara, 1/4 to Parness, and 1/4 to Lincoln. The partnership agreement states that a withdrawing partner will receive cash equal to the book value of his or her partners' equity. Journalize the...
Answer all
HH and נR are fashion designers who agreed to form a partnership to open a dothing store. An attorney prepares the partnership agreement, indicates that assets invested in the partnership will be recorded at their fair market value and that liabilities will be assumed at book value. The assets contributed by each partner and the liabilities assumed by the partnership follow. Assets Cash Accounts receivable Allowance for uncollectible accounts Book value Allowance for uncollectible accounts Fair Value Supplies...
QUESTION 6 Which of the following statements is true in regards to partnerships? Partners are easily able to limit their liability • Partners cannot normally be involved in the management of the partnership Net assets contributed by partners are recorded at their current market value Partnerships are subject to the same tax rate as companies or trusts QUESTION 7 A partnership capital account is opened for each partner to: Keep track of the partners share of profits Keep track of...
1. When a partner sells 40% of his interest to an outsider at a selling price that is higher than 40% , A total partnership capitalization is not affected. B. the selling price becomes the new partner's capital balance. C. the new partner will have the same capital balance as the old (selling) partner. D. total partnership capitalization is increased by the amount paid by the new partner. 2. From the following statements, which is NOT TRUE of the division...
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