Question

In: Accounting

A partner withdraws from a partnership by selling their interest in the partnership to a person...

A partner withdraws from a partnership by selling their interest in the partnership to a person who is not currently associated with the partnership. As a result of this transaction, what will happen to the capital account balances of the other partners in the partnership?

They will increase
They will decrease
They will remain the same
They may increase, decrease, or remain the same

What happens when an additional partner is admitted to a partnership by a contribution of assets to the partnership?

The total assets of the partnership do not change
No liabilities can be contributed at the same time
The amount of the asset contribution is the same as the amount of the debit to the new partner’s capital account
The total of the partners’ equity accounts increases

Benson and Orton are partners who share profit/loss in the ratio of 2:3. Benson has a capital balance of $50,000 and Orton has a capital balance of $30,000. Ramsey is admitted to the partnership and is given a 40% ownership interest by investing $20,000 in cash. What is Benson’s capital balance after admitting Ramsey?

$18,000
$20,000
$25,000
$42,000

Benson and Orton are partners who share profit/loss in the ratio of 2:3. Benson has a capital balance of $30,000 and Orton has a capital balance of $50,000. Ramsey is admitted to the partnership and is given a 10% ownership interest by investing $20,000 in cash. What is Orton’s capital balance after admitting Ramsey?

$56,000
$44,000
$34,000
$20,000

Harriet, Mickey, and Zack decide to liquidate their partnership. All assets are sold for cash and all the liabilities are paid. After this, their capital balances are: Harriet - $27,000; Mickey - ($12,000); Zack - $43,000. Their profit/loss percentages are: Harriet - 30%; Mickey - 40%; Zack - 30%. Mickey is unable to contribute any assets to reduce his deficit. How much cash will Harriet receive as a result of the partnership liquidation?

$15,000
$21,000
$23,400
$27,000

How is the remaining cash of a partnership ( after all creditors have been paid ) divided among partners upon liquidation?

According to their capital balances
According to their contribution of assets
According to their withdrawal account balances
According to their profit/loss ratio

Bobbi and Stuart are partners. Bobbi’s capital balance is $40,000 and Stuart’s capital balance is $70,000. Bobbi sells her interest in the partnership to John for $50,000. The journal entry to record the admission of John as a new partner would include:

A credit to John’s capital account for $40,000
A credit to John’s capital account for $50,000
A credit to John’s capital account for $40,000 and a credit to Stuart’s capital account for $10,000
A credit to Stuart’s capital for $10,000

Partners Ken and Macki each have a capital balance of $40,000 and share profit/loss in a 3:2 ratio. Cash equals $20,000, noncash assets equal $120,000, and liabilities equal $60,000. They decide to liquidate the partnership and the noncash assets are sold for $60,000. Both partners agree to make up any capital deficits with personal cash contributions. How much cash will Macki receive as a result of the liquidation?

$0
$4,000
$16,000
$24,000

ABC Company, a private company, decides to lease new manufacturing equipment. The lease qualifies as a capital lease under ASPE. The lease transaction will be recorded at:

The fair market value of the leased equipment
The present value of the lease payments
The higher of the fair market value of the leased equipment and the present value of the lease payments
The lower of the fair market value of the leased equipment and the present value of the lease payments

The term “deficit” is used to refer to a debit balance in which of the following accounts of a corporation?

Retained Earnings
Authorized Shares
Organization Costs
Common Shares

Expert Solution

As per policy we have to answer first four questions

1) Solution: will remain the same.
Explanation: Since the person is currently not associated with the partnership thus capital account balances of the other partners will remain unchanged
2) Solution: The total of the partners’ equity accounts increases
Explanation: With an additional partner both total owner's equity of the partnership and the total assets are increased.
3) Solution: $42,000
Explanation: Total investment = 50000 + 30,000 + 20000 = 100,000
40% interest = 40,000
Loss of $20,000 will be divided in the ratio of 2:3
After admitting Ramsey Benson’s capital balance = 50,000 - (20,000 * 2/5) = 42,000
4) Solution: $56,000
Explanation: Total investment = 30000 + 50,000 + 20000 = 100,000
10% interest = 10,000
Benefit of $10,000 will be divided in the ratio of 2:3
Orton’s capital balance after admitting Ramsey = 50,000 + 10,000 * 3/5 = 56,000

ekkarill92 answered 2 years ago

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