Test bank accounting 25th editon warren chapter 12 accounting for

In a partnership liquidation, gains and losses on the sale of partnership assets are divided among the partners' capital accounts on the basis of their capital balances... The articles o

Chapter 12 Accounting for Partnerships and Limited

2 In a general partnership, each partner is individually liable to creditors for debts incurred by the partnership,

to the extent of the partner's capital balance

9 When compared to a corporation, one of the major advantages of a partnerships is its relative ease of

15 The chart of accounts for a partnership, with the exception of drawing and capital accounts, does not differ

from the chart of accounts for a sole proprietorship

18 Accounts receivable contributed to the partnership are recorded at their face value

True False

19 A new partner contributes accounts receivable to a partnership which appear in the ledger of his sole

proprietorship at $20,500 and there was an allowance for doubtful accounts of $750 If $600 of the accounts receivables are completely worthless, the partnership accounts receivable should be debited for $19,900 True False

24 If the net income of a partnership is less than the total of the allowances provided by the partnership

agreement, the difference must be divided among the partners in the income-sharing ratio

26 A devotes full time and B devotes one-half time to their partnership If the partnership agreement is silent concerning the division of net income, A will receive a $20,000 share of a net income of $30,000

True False

27 In the distribution of income, the net income is less than the salary and interest allowances granted; the remaining balance will be a negative amount that must be divided among the partners as though it were a loss True False

31 Many partnerships provide for the admission of new partners or withdrawals of present partners by

amending existing partnership agreements, so that the firm may continue to operate without executing a new agreement

33 Partnership's asset accounts should be changed from cost to fair market value when a new partner is

admitted to a firm or an existing partner withdraws and dies

True False

34 In admitting a new partner, where the company chooses to use the purchase of an interest method, the capital interest of the new partner is obtained from the current partners and both the total assets and total capital are increased

True False

35 When a new partner purchases the entire interest of an old partner, the new partner's capital account should

be credited for the amount he or she paid to the old partner

37 When a new partner is admitted by making an investment in the partnership, the old partners' capital

accounts are always credited

39 Sarno has a capital balance of $42,000 after adjusting the assets to fair market value Minton contributes

$22,000 to receive a 30% interest in the new partnership The bonus paid by Minton is $2,800

41 If not enough partnership cash or other assets are available to pay the withdrawing partner, a liability may

be created for the amount owed the withdrawing partner

True False

42 When a partner withdraws from the partnership by selling his or her interest back to the partnership, the remaining partners must pay the withdrawing partner a specified amount from their personal assets

48 In a partnership liquidation, gains and losses on the sale of partnership assets are divided among the

partners' capital accounts on the basis of their capital balances

50 In a partnership liquidation, if a partner has a debit capital balance in his or her capital account, he or she is responsible for contributing personal assets sufficient to eliminate the deficit

59 Which of the following is characteristic of a general partnership?

A The partners have co-ownership of partnership property

B The partnership is subject to federal income tax

C The partnership has an unlimited life

D The partners have limited liability

60 Which of the following is not a characteristic of a general partnership?

A the partnership is created by a contract

B mutual agency

C partners share equally in net income or net losses unless an agreement states differently

D dissolution occurs only when all partners agree

61 Which of the following is an advantage of a general partnership when compared to a corporation?

A A partnership is more likely to have a positive net income

B The partnership is relatively inexpensive to organize

C Creditors to a partnership cannot attach personal assets of partners

D The partnership usually hires professional managers

62 Which of the following is a disadvantage of a partnership when compared to a corporation?

A The partnership is more likely to have a net loss

B The partnership is easier to organize

C The partnership is less expensive to organize

D The partnership has limited life

65 When a limited partnership is formed

A the partnership activities are limited

B all partners have limited liability

C some of the partners have limited liability

D none of the partners have limited liability

A book values on the partners' books prior to their being contributed to the partnership

B fair market value at the time of the contribution

C original costs to the partner contributing them

D assessed values for property purposes

70 As part of the initial investment, a partner contributes equipment that had originally cost $125,000 and on which accumulated depreciation of $100,000 has been recorded If similar equipment would cost $150,000 to replace and the partners agree on a valuation of $38,000 for the contributed equipment, what amount should be debited to the equipment account?

73 Franco and Elisa share income equally During the current year the partnership net income was

$40,000 Franco made withdrawals of $12,000 and Elisa made withdrawals of $17,000 At the beginning of the year, the capital account balances were: Franco capital, $40,000; Elisa capital, $58,000 Franco’s capital account balance at the end of the year is

74 Franco and Elisa share income equally During the current year the partnership net income was

$40,000 Franco made withdrawals of $12,000 and Elisa made withdrawals of $17,000 At the beginning of the year, the capital account balances were: Franco capital, $42,000; Elisa capital, $58,000 Elisa’s capital account balance at the end of the year is

75 Partnership income and losses are usually divided on the basis of interest, salaries, and stated ratios

because

A partners seldom contribute time and resources equally

B this method reflects the amount of time devoted to the partnership by the partners

C it is simpler than following the legal rules

D it prevents arguments among the partners

80 Xavier and Yolonda have original investments of $50,000 and $100,000 respectively in a partnership The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 10%, salary allowances of $27,000 and $18,000 respectively, and the remainder equally How much of the net loss of $6,000 is allocated to Xavier?

81 If there is no written agreement as to the way income will be divided among partners

A they will share income and losses equally

B they will share income and losses according to their capital balances

C they will share income and losses according to the time devoted to the business

D there really is no partnership agreement

82 Partner A has a capital balance of $40,000 and devotes full time to the partnership Partner B has a capital balance of $50,000 and devotes half time to the partnership If no other information is available regarding distributions, in what ratio is net income to be divided?

83 Details of the division of net income for a partnership should be disclosed

A in the asset section of the balance sheet

B in the partners’ subsidiary ledger

C in the statement of cash flows

D in the partnership income statement

84 Pia and Ramona are partners who share income in the ratio of 3:2 Their capital balances are $90,000 and

$130,000 respectively Income Summary has a credit balance of $40,000 What is Pia’s capital balance after closing Income Summary to Capital?

85 Pia and Ramona are partners who share income in the ratio of 3:2 Their capital balances are $90,000 and

$130,000 respectively Income Summary has a credit balance of $40,000 What is Ramona’s capital balance after closing Income Summary to Capital?

86 Use the following information to answer the following questions

Izabelle and Marta are forming a partnership Izabelle will invest a piece of equipment with a book value of

$7,500 and a fair market value of $20,000 Marta will invest a building with a book value of $40,000 and a fair market value of $58,000

What amount will be recorded to the building account?

87 Use the following information to answer the following questions

Izabelle and Marta are forming a partnership Izabelle will invest a piece of equipment with a book value of

$7,500 and a fair market value of $20,000 Marta will invest a building with a book value of $40,000 and a fair market value of $58,000

What amount will be recorded to Izabelle’s capital account?

88 Use the following information to answer the following questions

Izabelle and Marta are forming a partnership Izabelle will invest a piece of equipment with a book value of

$7,500 and a fair market value of $20,000 Marta will invest a building with a book value of $40,000 and a fair market value of $58,000

What amount will be recorded to Marta’s capital account ?

89 Robert Johnson contributed equipment, inventory, and $42,000 cash to the partnership The equipment had

a book value of $25,000 and market value of $28,000 The inventory has a book value of $50,000, but only had

a market value of $15,000 due to obsolescence The partnership also assumed a $12,000 note payable owed by Robert that was originally used to purchase the equipment

What amount should Robert’s capital account be recorded?

What amount should Henry’s capital account be recorded?

91 Ofelia and Teresa share income and losses in a 2:1 ratio after allowing for salaries to Ofelia of $48,000 and

$60,000 to Teresa Net income for the partnership is $132,000 Income should be divided as follows:

92 Carla and Eliza share income equally During the current year the partnership net income was

$40,000 Carla made withdrawals of $12,000 and Eliza made withdrawals of $17,000 At the beginning of the year, the capital account balances were: Carla capital, $42,000; Eliza capital, $55,000 Eliza’s capital account balance at the end of the year is

93 Xavier and Yolanda have original investments of $50,000 and $100,000 respectively in a partnership The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 20%, salary allowances of $27,000 and $18,000 respectively, and the remainder equally How much of the net income of $91,000 is allocated to Yolanda?

97 Xavier and Yolanda have original investments of $50,000 and $100,000 respectively in a partnership The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 10%, salary allowances of $38,000 and $28,000 respectively, and the remainder equally How much of the net income of $75,000 is allocated to Xavier?

99 Tomas and Saturn are partners who share income in the ratio of 3:1 Their capital balances are $40,000 and

$60,000 respectively Income Summary has a credit balance of $20,000 What is Tomas’s capital balance after closing Income Summary to Capital?

102 Tomas and Saturn are partners who share income in the ratio of 3:1 Their capital balances are $40,000 and $60,000 respectively Income Summary has a credit balance of $20,000 What is Saturn’s capital balance after closing Income Summary to Capital?

103 Franco and Jason share income and losses in a 2:1 ratio after allowing for salaries to Franco of $15,000 and

$30,000 to Jason If the partnership suffers a $15,000 loss, by how much would Jason’s capital account

104 Lambert invests $20,000 for a 1/3 interest in a partnership in which the other partners have capital totaling

$34,000 before admitting Lambert After distribution of the bonus, what is Lambert’s capital?

105 Douglas pays Selena $45,000 for her 30% interest in a partnership with total net assets of

$125,000 Following this transaction, Douglas’ capital account should have a credit balance of

106 Nick is admitted to an existing partnership by investing cash Nick agrees to pay a bonus for his

ownership interest because of the past success of the partnership When Nick’s investment in the partnership is recorded

A his capital account will be credited for more than the cash he invested

B his capital account will be credited for the amount of cash he invested

C a bonus will be credited for the amount of cash he invested

D a bonus will be distributed to the old partners' capital accounts

107 Bobbi and Stuart are partners The partnership capital of Bobbi is $40,000 and Stuart is $70,000 Bobbi sells his 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 a credit to John’s capital for $40,000

B a credit to Stuart’s capital for $10,000

C a credit John’s capital for $50,000

D a credit to John’s capital for $40,000 and a credit to Stuart’s capital for $10,000

108 When a partner dies, the capital account balances of the remaining partners

A will increase

B will decrease

C will remain the same

D may increase, decrease, or remain the same

109 A partner withdraws from a partnership by selling her interest to another person who currently is not

associated with the firm As a results of this transaction, the capital account balance of the other partners in the partnership

A will increase

B will decrease

C will remain the same

D may increase, decrease, or remain the same

110 Samuel and Darci are partners The partnership capital for Samuel is $50,000 and for Darci is

$60,000 Josh is admitted as a new partner by investing $50,000 cash Josh is given a 20% interest in return for his investment The amount of the bonus to the old partners is

112 A new partner may be admitted to a partnership by

A inheriting a partnership interest

B contributing assets to the partnership

C purchasing a specific quantity of assets from the partnership

D a written approval under the federal law

113 A change in the ownership of a partnership results in the

A consolidating of the partnership

B liquidating of the partnership

C realization of the partnership

D dissolution of the partnership

115 When a new partner is admitted to a partnership, there should be a(n)

A increase in the total assets of the partnership

B new capital account added to the ledger for the new partner

C increase in the total owner's equity of the partnership

D debit amount to the partner’s capital account for the cash received by the current partner

116 When an additional partner is admitted to a partnership by contribution of assets to the partnership

A the total assets of the partnership do not change

B no liabilities can be contributed at the same time

C the amount of the cash contribution is the same as the amount of the debit to the new partner's capital account

D the total of the owner's equity accounts increases

117 When a new partner is admitted to a partnership

A a bonus may be attributable to the old partner

B a bonus may only result from more cash being given by the new partner than the value of the of the assets being purchased

C a bonus agreed upon by the partners is recorded as an asset so long as the amount is within the range set by the SEC

D a bonus is not recorded

118 The Calvin-Dogwood Partnership owns inventory that was purchased for $90,000, has a current

replacement cost of $85,900, and is priced to sell for $125,000 At what amount should the inventory be recorded in the accounts of the new partnership if Alexis is to be admitted?

123 Benson and Orton are partners who share income in the ratio of 1:3 and have capital balances of $70,000 and $30,000 respectively Ramsey is admitted to the partnership and is given a 40% interest by investing

$20,000 What is Orton’s capital balance after admitting Ramsey?

124 Singer and McMann are partners in a business Singer’s original capital was $40,000 and McMann’s was

$60,000 They agree to salaries of $12,000 and $18,000 for Singer and McMann respectively and 10% interest

on original capital If they agree to share remaining profits and losses on a 3:2 ratio, what will Singer’s share of the income be if the income for the year was $50,000?

125 Singer and McMann are partners in a business Singer’s original capital was $40,000 and McMann’s was

$60,000 They agree to salaries of $12,000 and $18,000 for Singer and McMann respectively and 10% interest

on original capital If they agree to share remaining profits and losses on a 3:2 ratio, what will McMann‘s share

of the income be if the income for the year was $30,000?

126 Singer and McMann are partners in a business Singer’s original capital was $40,000 and McMann’s was

$60,000 They agree to salaries of $12,000 and $18,000 for Singer and McMann respectively and 10% interest

on original capital If they agree to share remaining profits and losses on a 3:2 ratio, what will Singer’s share of the income (loss) be if the net loss for the year was $10,000?

127 Singer and McMann are partners in a business Singer’s original capital was $40,000 and McMann’s was

$60,000 They agree to salaries of $12,000 and $18,000 for Singer and McMann respectively and 10% interest

on original capital If they agree to share remaining profits and losses on a 3:2 ratio, what will Singer’s share of the income be if the income for the year was $15,000?

128 Singer and McMann are partners in a business Singer’s original capital was $40,000 and McMann’s was

$60,000 They agree to salaries of $12,000 and $18,000 for Singer and McMann respectively and 10% interest

on original capital If they agree to share remaining profits and losses on a 3:2 ratio, what will McMann’s share

of the income be if the income for the year was $15,000?

129 Alpha and Beta are partners who share income in the ratio of 1:2 and have capital balances of $40,000 and

$70,000 at the time they decide to terminate the partnership After all noncash assets are sold and all liabilities are paid, there is a cash balance of $50,000 What amount of loss on realization should be allocated to Alpha?

130 Teri, Doug, and Brian are partners with capital balances of $20,000, $30,000, and $50,000

respectively They share income in the ratio of 3:2:1 Income Summary with a debit balance of $30,000 is closed to the capital accounts Doug withdraws from the partnership How much cash does he get upon

131 A partnership liquidation occurs when

A a new partner is admitted

B a partner dies

C the ownership interest of one partner is sold to a new partner

D the assets are sold, liabilities paid, and business operations terminated

132 The balance sheet of Morgan and Rockwell was as follows immediately prior to the partnership's being liquidated: cash, $20,000; other assets, $160,000; liabilities, $40,000; Morgan capital, $60,000; Rockwell capital, $80,000 The other assets were sold for $139,000 Morgan and Rockwell share profits and losses in a 2:1 ratio As a final cash distribution from the liquidation, Morgan will receive cash totaling

135 A gain or loss on realization is divided among partners according to their

A income sharing ratio

137 Everett, Miguel, and Ramona are partners, sharing income 1:2:3 After selling all of the assets for cash, dividing losses on realization, and paying liabilities, the balances in the capital accounts are as follows: Everett,

$50,000 Cr.; Miguel, $40,000 Dr.; and Ramona, $30,000 Cr How much cash is available for distribution to the partners?

139 Antonio and Barbara are partners who share income in the ratio of 1:2 and have capital balances of

$40,000 and $70,000 at the time they decide to terminate the partnership After all noncash assets are sold and all liabilities are paid, there is a cash balance of $80,000 What amount of loss on realization should be

140 Soledad and Winston are partners who share income in the ratio of 1:3 and have capital balances of

$100,000 and $140,000 at the time they decide to terminate the partnership After all noncash assets are sold and all liabilities are paid, there is a cash balance of $130,000 What amount of loss on realization should be allocated to Soledad?

141 Soledad and Winston are partners who share income in the ratio of 1:3 and have capital balances of

$100,000 and $140,000 at the time they decide to terminate the partnership After all noncash assets are sold and all liabilities are paid, there is a cash balance of $130,000 What amount of loss on realization should be allocated to Winston?

145 The capital accounts of Harrison and Marti have balances of $160,000 and $110,000, respectively, on January 1, 2014, the beginning of the current fiscal year On April 10, Harrison invested an additional $20,000 During the year, Harrison and Marti withdrew $96,000 and $78,000, respectively, and net income for the year was $264,000 The articles of partnership make no reference to the division of net income

Based on this information, the statement of partners’ equity for 2014 would show what amount in the capital account for Marti on December 31, 2014?

Based on this information, the statement of partners’ equity for 2014 would show what amount in the capital account for Harrison on December 31, 2014?

Based on this information, the statement of partners’ equity for 2010 would show what amount as total capital for the partnership on December 31, 2010?

148 The capital accounts of Hawk and Martin have balances of $160,000 and $140,000, respectively, on January 1, 2010, the beginning of the current fiscal year On April 10, Hawk invested an additional $10,000 During the year, Hawk and Martin withdrew $86,000 and $68,000, respectively, and net income for the year was $258,000 The articles of partnership make no reference to the division of net income

Based on this information, the statement of partners’ equity for 2010 would show what amount in the capital account for Martin on December 31, 2010?

Based on this information, the statement of partners’ equity for 2010 would show what amount in the capital account for Hawk on December 31, 2010?

Based on this information, the statement of partners’ equity for 2010 would show what amount as total capital for the partnership on December 31, 2010?

respectively If the parties agree that the business is worth $240,000, what is the amount of bonus that should

be recognized in the accounts at the admission of Allen?

152 The Craig-Doran Partnership owns inventory that was purchased for $85,000, has a current replacement cost of $54,500, and is priced to sell for $98,000 At what amount should the inventory be recorded in the accounts of the new partnership if Alexis is to be admitted?

153 Paul and Roger are partners who share income in the ratio of 3:2 Their capital balances are $90,000 and

$130,000 respectively Income Summary has a credit balance of $50,000 What is Roger’s capital balance after closing Income Summary to Capital?

154 Paul and Roger are partners who share income in the ratio of 3:2 Their capital balances are $90,000 and

$130,000 respectively Income Summary has a credit balance of $50,000 What is Paul’s capital balance after closing Income Summary to Capital?

157 Jackson and Campbell have capital balances of $100,000 and $300,000 respectively Jackson devotes full time and Campbell one-half time to the business Determine the division of $150,000 of net income in ratio of time devoted to business

$21,000 and merchandise inventory of $44,500 The partners agree that the merchandise inventory is to be priced at $48,000 Journalize the entries to record in the partnership accounts (a) Aaron’s investment and (b) Kim’s investment

159 Barton and Fallows form a partnership by combining the assets of their separate businesses Barton

contributes accounts receivable with a face amount of $50,000 and equipment with a cost of $190,000 and accumulated depreciation of $100,000 The partners agree that the equipment is to be priced at $85,000, that

$3,500 of the accounts receivable are completely worthless and are not to be accepted by the partnership, and that $1,500 is a reasonable allowance for the uncollectibility of the remaining accounts receivable Fallows contributes cash of $28,500 and merchandise inventory of $55,500 The partners agree that the merchandise inventory is to be priced at $60,000 Journalize the entries to record in the partnership accounts (a) Barton’s investment and (b) Fallows’ investment

160 Trevor Smith contributed equipment, inventory, and $54,000 cash to a partnership The equipment had a book value of $30,000 and a market value of $36,000 The inventory had a book value of $60,000, but only had a market value of $20,000, due to obsolescence The partnership also assumed a $17,000 note payable owed by Smith that was used originally to purchase the equipment

Provide the journal entry for Smith’s contribution to the partnership

161 Emerson and Dakota formed a partnership dividing income as follows:

1 Annual salary allowance to Emerson of $48,000

2 Interest of 8% on each partner’s capital balance on January 1

3 Any remaining net income divided equally

Emerson and Dakota had $25,000 and $140,000 respectively in their January 1 capital balances Net income for the year was $220,000

How much net income should be distributed to Emerson?

162 Emerson and Dakota formed a partnership dividing income as follows:

1 Annual salary allowance to Emerson of $58,000

2 Interest of 8% on each partner’s capital balance on January 1

3 Any remaining net income divided equally

Emerson and Dakota had $25,000 and $140,000 respectively in their January 1 capital balances New income for the year was $220,000

How much net income should be distributed to Dakota?

a Provide the journal entry for the revaluation of land

b Provide the journal entry to admit Gavin

164 Malcolm has a capital balance of $90,000 after adjusting to fair market value Celeste contributes $45,000

to receive a 25% interest in a new partnership with Malcolm

Determine the amount and recipient of the partner bonus

165 Prior to liquidating their partnership, Craig and Jenny had capital accounts of $70,000 and $110,000, respectively The partnership assets were sold for $285,000 The partnership had $25,000 of liabilities Craig and Jenny share income and losses equally Determine the amount received by Jenny as a final distribution from liquidation of the partnership

166 The capital accounts of Hogan and Moss have balances of $90,000 and $65,000, respectively on January 1,

2011, the beginning of the current fiscal year On April 10, Hogan invested an additional $8,000 During the year, Hogan and Moss withdrew $40,000 and $32,000, respectively, and net income for the year was

$98,000 The articles of partnership make no reference to the division of net income

167 Hamir, Darci, and Pete are partners sharing income 3:2:1, respectively After the firm’s loss from

liquidation is distributed, the capital account balances were: Hamir, $45,000 Dr.; Darci, $90,000 Cr., and Pete,

$64,000 Cr If Hamir is personally bankrupt and unable to pay any of the $45,000, what will be the amount of cash received by Darci and Pete upon liquidation? Show your work

169 After the tangible assets have been adjusted to current market prices, the capital accounts of Harper and Kahlil have balances of $60,000 and $90,000, respectively Fay is to be admitted to the partnership,

contributing $45,000 cash, for which she is to receive an ownership equity of $60,000 All partners share equally in income

Required:

(1) Journalize the entry to record the admission of Fay, who is to receive a bonus of $15,000

(2) What are the capital balances of each partner after the admission of the new partner?

The following additional partner transactions took place during the year:

(1) In early January, Houston is admitted to the partnership by contributing $25,000 cash for a 25% interest

(2) Net income of $160,000 was earned in 2010 In addition, Waverley received a salary allowance of $30,000 for the year The

three partners agree to an income-sharing ratio equal to their capital balances after admitting Houston

171 The capital accounts of Hope and Indiana have balances of $115,000 and $95,000, respectively Clint and Casey are to be admitted to the partnership Clint buys one-fifth of Hope’s interest for $30,000 and one-fourth

of Indiana’s interest for $20,000 Casey contributes $45,000 cash to the partnership, for which he is to receive

an ownership equity of $45,000

Required:

(1) Journalize the entries to record the admission of (a) Clint and (b) Casey

(2) What are the capital balances of each partner after the admission of the new partners?

(a) No agreement concerning division of net income;

(b) Divided in the ratio of original capital investment;

(c) Interest at the rate of 15% allowed on original investments and the remainder divided in the ratio of 2:3;

(d) Salary allowances of $50,000 and $70,000, respectively, and the balance divided equally;

(e) Allowance of interest at the rate of 15% on original investments, salary allowances of $50,000 and $70,000, respectively, and the

remainder divided equally

(a) No agreement concerning division of net income;

(b) Divided in the ratio of original capital investment;

(c) Interest at the rate of 15% allowed on original investments and the remainder divided in the ratio of 2:3;

(d) Salary allowances of $50,000 and $70,000, respectively, and the balance divided equally;

(e) Allowance of interest at the rate of 15% on original investments, salary allowances of $50,000 and $70,000, respectively, and the

remainder divided equally

174 Benson contributed land, inventory, and $22,000 cash to a partnership The land had a book value of

$65,000 and a market value of $111,000 The inventory had a book value of $60,000 and a market value of

$58,000 The partnership also assumed a $52,000 note payable owned by Benson that was used originally to purchase the land

176 Prior to liquidating their partnership, Samuel and Brian had capital accounts of $60,000 and $240,000, respectively The partnership assets were sold for $120,000 The partnership had no liabilities Samuel and Brian share income and losses equally

Required:

a Determine the amount of Samuel’s deficiency

b Determine the amount distributed to Brian, assuming Samuel is unable to satisfy the deficiency

Revenues (in thousands) $50,625 $57,750

Required:

a For 2011 and 2012, determine the revenue per employee (excluding members)

b Interpret the trend between the two years

178 Gleason invested $90,000 in the James and Kirk partnership for ownership equity of $90,000 Prior to the investment land was revalued to a market value of $425,000 from a book value of $200,000 James and Kirk share net income in a 1:2 ratio

a Provide the journal entry for the revaluation of land

b Provide the journal entry to admit Gleason

Revenues (in thousands) $60,525 $58,500

Required:

a For 2011 and 2012, determine the revenue per employee (excluding members)

b Interpret the trend between the two years

180 Match each statement to the item listed below

1 Simple to form

statement of partnership equity

2 Place where changes in partner capital accounts

for a period of time are reported deficiency

3 A step during liquidation when partnership assets

4 Where the share of loss on realization is greater

than the balance in partner capital partnership

5 Each partner may act on behalf of the entire

partnership so that the liabilities created by one

partner become the liabilities of all partners proprietorship

6 An association of two or more persons to own

and manage a business for profit realization

7 Used to divide the excess of allowances over loss

when net losses occur

income sharing

ratio

8 The winding up process of a partnership liquidation

181 Match the term with the appropriate definition

1 Without an agreement, the law will stipulate

this method of sharing profits and losses unlimited liability

2 When a partnership cannot pay its debts with

business assets, the partners must use personal

assets to meet the debt articles of partnership

3 Agreement that is the contract between

4 Causes the dissolution of a partnership mutual agency

5 The final step in the liquidation of a

6 Every partner can bind the business to a

contract within the scope of the partnership’s

regular business operations equally

7 A voluntary association of two or more persons

who co-own a business for profit

distribution of remaining cash to

partners

8 The process of going out of business by selling

the entity’s assets and paying its liabilities death of a partner

182 Gentry, sole proprietor of a hardware business, decides to form a partnership with Noel Gentry’s accounts are as follows: