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Mutual agency means each partner can bind or commit the partnership to any contract within the scope of the partnership's business.

A) True
B) False

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Lewis and Watson formed a partnership.Lewis contributed $15,000 cash and accounts receivable worth $13,000.Watson's investment included cash,$8,000; inventory,$9,000; and supplies,$1,000.(All values are current fair market values).Prepare the journal entry to record the formation of the partnership.

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Kellan,Willa,and Sami are partners with capital balances of $90,000,$70,000,and $50,000,respectively.The partners agreed to share profits and losses as follows: Salary allowances of $5,000 to Kellan,$10,000 to Willa,and $15,000 to Sami. Interest allowances of 10% on beginning-of-year capital balances Balance to be divided equally. If net income for the year is $170,000,calculate each partner's share and prepare the appropriate journal entry to close the Income Summary to the capital accounts.

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Marko,Billy,and Jellian are liquidating their partnership.They have no agreement for sharing profits and losses.The ending capital account balances are Marko,$13,000; Billy,$13,000; Jellian,($2,000) .There is $24,000 in cash to be distributed to the partners.The journal entry to record the distribution should be:


A)
Marko,Billy,and Jellian are liquidating their partnership.They have no agreement for sharing profits and losses.The ending capital account balances are Marko,$13,000; Billy,$13,000; Jellian,($2,000) .There is $24,000 in cash to be distributed to the partners.The journal entry to record the distribution should be: A) B) C) D) E)
B)
Marko,Billy,and Jellian are liquidating their partnership.They have no agreement for sharing profits and losses.The ending capital account balances are Marko,$13,000; Billy,$13,000; Jellian,($2,000) .There is $24,000 in cash to be distributed to the partners.The journal entry to record the distribution should be: A) B) C) D) E)
C)
Marko,Billy,and Jellian are liquidating their partnership.They have no agreement for sharing profits and losses.The ending capital account balances are Marko,$13,000; Billy,$13,000; Jellian,($2,000) .There is $24,000 in cash to be distributed to the partners.The journal entry to record the distribution should be: A) B) C) D) E)
D)
Marko,Billy,and Jellian are liquidating their partnership.They have no agreement for sharing profits and losses.The ending capital account balances are Marko,$13,000; Billy,$13,000; Jellian,($2,000) .There is $24,000 in cash to be distributed to the partners.The journal entry to record the distribution should be: A) B) C) D) E)
E) Marko,Billy,and Jellian are liquidating their partnership.They have no agreement for sharing profits and losses.The ending capital account balances are Marko,$13,000; Billy,$13,000; Jellian,($2,000) .There is $24,000 in cash to be distributed to the partners.The journal entry to record the distribution should be: A) B) C) D) E)

F) A) and E)
G) C) and E)

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Chen and Wright are forming a partnership.Chen will invest a building that currently is being used by another business owned by Chen.The building has a fair market value of $65,000.Also,the partnership will assume responsibility for a $15,000 note secured by a mortgage on the building.Wright will invest $20,000 cash.On the books of the partnership,the amount to be recorded for the building and credit to Chen's capital account are:


A) $65,000 and $65,000.
B) $50,000 and $20,000.
C) $50,000 and $40,000.
D) $65,000 and $50,000.
E) $20,000 and $65,000.

F) A) and C)
G) B) and E)

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If there is no partnership agreement,the law requires that net incomes or losses are divided among partners in the ratio of their capital investments.

A) True
B) False

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Rice,Hepburn,and DiMarco formed a partnership with Rice contributing $50,000,Hepburn contributing $30,000,and DiMarco contributing $20,000.Their partnership agreement called for the earnings division to be based on the ratio of capital investments.If the partnership had a net income of $75,000 for its first year of operation,how much would be credited to DiMarco's capital account?


A) $10,000.
B) $15,000.
C) $20,000.
D) $30,000.
E) $75,000.

F) None of the above
G) B) and E)

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Partnership accounting:


A) Is the same as accounting for a sole proprietorship.
B) Is the same as accounting for a corporation.
C) Is the same as accounting for a sole proprietorship,except that separate capital and withdrawal accounts are kept for each partner.
D) Is the same as accounting for a not-for profit organization.
E) None of these answers is correct.

F) B) and D)
G) B) and C)

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The TJR Partnership recorded the following journal entry: The TJR Partnership recorded the following journal entry: The transaction reflects: A) Acceptance of a new partner who invests $20,000 and receives a $4,000 bonus. B) Withdrawal of a partner who pays a $2,000 bonus to each of the other partners. C) Addition of a partner who pays a bonus to each of the other partners. D) Additional investment into the partnership by Tanner and Jackson. E) Withdrawal of $2,000 each by Tanner and Jackson. The transaction reflects:


A) Acceptance of a new partner who invests $20,000 and receives a $4,000 bonus.
B) Withdrawal of a partner who pays a $2,000 bonus to each of the other partners.
C) Addition of a partner who pays a bonus to each of the other partners.
D) Additional investment into the partnership by Tanner and Jackson.
E) Withdrawal of $2,000 each by Tanner and Jackson.

F) B) and C)
G) A) and E)

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Partners can transfer both assets and liabilities to a partnership.

A) True
B) False

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In order to buy into an existing partnership,the new partner must contribute cash.

A) True
B) False

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If the partners agree on a formula to share income and say nothing about losses,then the losses are shared equally.

A) True
B) False

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Brian Tanner contributed $18,000 in cash plus office equipment with a fair value of $30,000 to the BT Partnership.In addition,the partnership assumed a $10,000 note payable.The journal entry to record the transaction is:


A)
Brian Tanner contributed $18,000 in cash plus office equipment with a fair value of $30,000 to the BT Partnership.In addition,the partnership assumed a $10,000 note payable.The journal entry to record the transaction is: A) B) C) D) E)
B)
Brian Tanner contributed $18,000 in cash plus office equipment with a fair value of $30,000 to the BT Partnership.In addition,the partnership assumed a $10,000 note payable.The journal entry to record the transaction is: A) B) C) D) E)
C)
Brian Tanner contributed $18,000 in cash plus office equipment with a fair value of $30,000 to the BT Partnership.In addition,the partnership assumed a $10,000 note payable.The journal entry to record the transaction is: A) B) C) D) E)
D)
Brian Tanner contributed $18,000 in cash plus office equipment with a fair value of $30,000 to the BT Partnership.In addition,the partnership assumed a $10,000 note payable.The journal entry to record the transaction is: A) B) C) D) E)
E) Brian Tanner contributed $18,000 in cash plus office equipment with a fair value of $30,000 to the BT Partnership.In addition,the partnership assumed a $10,000 note payable.The journal entry to record the transaction is: A) B) C) D) E)

F) A) and D)
G) B) and C)

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Alban and Thompson formed a partnership with capital contributions with a fair value of $25,000 and $45,000,respectively.Their partnership agreement calls for Alban to receive a $12,000 annual salary allowance.Also,each partner is to receive a share of earnings equal to a 10% return on capital investments.The remaining income or loss is to be divided equally.If the net income for the year is $48,000,then Alban and Thompson's respective shares are:


A) $14,000; $14,000.
B) $12,000; $16,000.
C) $20,000; $8,000.
D) $16,500; $11,500.
E) $29,000; $19,000.

F) All of the above
G) B) and E)

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Assets invested by a partner into a partnership remain the property of the individual partner.

A) True
B) False

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Partnership accounting:


A) Uses a capital account for each partner.
B) Uses a withdrawals account for each partner.
C) Allocates net income according to the partnership agreement.
D) Allocates net loss according to the partnership agreement.
E) All of these answers are correct.

F) B) and C)
G) C) and E)

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Unlimited liability of partners is:


A) The agreement between partners that sets forth the terms under which the affairs of the partnership will be conducted.
B) In the absence of a contrary agreement,the legal responsibility of partners in a partnership to share all losses equally.
C) The legal relationship between partners in which all the partners must share liability for the partnership debts,but only up to the amount of their capital accounts.
D) The legal relationship among the partners whereby each partner is an agent of the partnership and is able to bind the partnership to contracts within the apparent scope of the partnership's business.
E) The legal relationship among general partners that makes each of them responsible for paying all the debts of the partnership if the other partners are unable to pay their shares.

F) A) and D)
G) A) and C)

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On August 1,Jill Farety and Nicole Osilinsky decide to form a partnership.Of the following items shown below,Jill invested the assets and the partnership assumed the liabilities: On August 1,Jill Farety and Nicole Osilinsky decide to form a partnership.Of the following items shown below,Jill invested the assets and the partnership assumed the liabilities: Nicole invested $40,000 in cash and $25,000 in equipment. Prepare two journal entries to record the partners' investments in the partnership. Nicole invested $40,000 in cash and $25,000 in equipment. Prepare two journal entries to record the partners' investments in the partnership.

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When a partnership is liquidated:


A) The noncash assets are converted to cash.
B) Any gain or loss on liquidation is allocated to the partners' capital accounts.
C) The liabilities are paid.
D) The remaining cash is distributed to the partners.
E) All of these answers are correct.

F) A) and E)
G) B) and C)

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A(n)__________________ is where at least one partner has a debit balance in his/her capital account.

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