Question

25) Steve owns 64% and Mark owns 36% of a partnership business. They purchase equipment with a suggested value of $9600. The current market value of the equipment at the time of purchase was $9100. At the time of the balance sheet preparation, depreciation of $160 was recorded. Based on the information provided, which of the following is TRUE of the partnership?

A) The Equipment account will be debited at $9100 on the date of purchase.

B) The Equipment account will be debited at $8940 on the date of purchase.

C) The Equipment account will be debited at $9600 on the date of purchase.

D) The Equipment account will be debited at $9440 on the date of purchase.

E) None of the above

26) Edwin and Darren have decided to form a partnership. Edwin contributes $80,000 cash and merchandise inventory with a current market value of $17,000. Darren contributes $2400 cash and office furniture with a current market value of $3200. When journalizing these transactions ________.

A) Office Furniture will be debited for $1070

B) Office Furniture will be credited for $3200

C) Office Furniture will be debited for $3200

D) Office Furniture will be credited for $1070

E) None of the above

27) Bill and Bob share profits of their partnership in the ratio of 6:1 respectively. If the net income of the firm is $29,000, calculate Bill's share of net income. (Do not round any intermediate calculations.)

A) $20,714; B) $4143; C) $29,000; D) $24,857; E) None of the above

28) Albert, Billy, and Cathy share profits and losses of their partnership as 1:4:3, respectively. If the net income is $30,000, calculate Albert's share of the profits. (Do not round any intermediate calculations.)

A) $7500; B) $11,250; C) $15,000; D) $3750; E) None of the above

29) Andre, Beau, and Caroline share profits and losses of their partnership in a 3:3:7 ratio respectively. If the net income is $900,000, calculate Caroline's share of the profits. (Do not round any intermediate calculations.)

A) $207,692; B) $484,615; C) $161,538; D) $69,231; E) None of the above

Answer 1

Answer to question 25 is as under:

Correct option would be Option C i.e. equipment account would be debited by its actual cost of purchase as on the date of purchase & in our case actual cost paid is $ 9,600 So at the time of purchase it would be recorded at $ 9,600 & the effect of depriciation & market value would be given at the end of the year & not at the date of purchase.

Answer to question 26 is as under:

Correct option would be option C i.e. office furniture would be debited by $ 3,200 as the journal entry would be as under:

Office Furniture A/c......... Dr 3,200

To Darren Capital Account........................ 3,200

(Being office furniture brought to partnership business)

Answer to question 27 is as under:

Bill's share of net of income would be as under:

Profit sharing ration is 6:1 means bill's share of income is 6/7

Net income is $ 29,000

So Bill's share would be 29,000 * 6/7 = 24,857.14

So the correct option is option D.

Answer to question 28 is as under:

Albert share of net income would be as under:

Profit sharring ratio is 1:4:3 means albert share is 1/8

Net income is $ 30,000

So Albert share would be 30,000 * 1/8 = 3,750

So the correct option is option D

Answer to question 29 is as under:

Caroline share of net income would be as under:

Profit sharring ratio is 3:3:7 means Caroline share is 7/13

Net income is $ 900,000

So Caroline share would be 900,000*7/13 = 484,615

So the correct option is option B