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Chapter 19 - Accounting for Partnerships
69. Lenik and Olsen are partners who share profits and losses in the ratio of 60 and 40
percent, respectively. The partnership agreement provides that each will be paid a yearly
salary of $19,000. The salaries were paid to the partners during 2013 and were charged to the
partners' drawing accounts. The Income Summary account has a debit balance of $4,000 after
revenue and expense accounts are closed at the end of the year.
1. What amount of net income or loss will be allocated to Lenik?
2. What amount of net income or loss will be allocated to Olsen?
70. Mavis and Roxanne are partners who share profits and losses equally. The partnership
agreement provides that Mavis will be paid an annual salary of $54,000 and Roxanne will be
paid an annual salary of $36,000. The salaries were paid to the partners during 2013 and were
charged to the partners' drawing accounts. The Income Summary account has a debit balance
of $10,000 after revenue and expense accounts are closed at the end of the year.
1. What amount of net income or loss will be allocated to Mavis?
2. What amount of net income or loss will be allocated to Roxanne?
Chapter 19 - Accounting for Partnerships
19-40
19-42
19-52
85. Match the accounting terms with the description by entering the proper number.
1. A member of a partnership who has unlimited
liability
General partner
1
2. A financial statement prepared to summarize the
changes in partners' capital accounts during an
accounting period
Distributive share
9
3. An association of two or more persons who carry on,
as co-owners, a business for profit
Partnership
agreement
7
4. Another term for partnership agreement
Unlimited liability
8
5. An informational entry in the general journal
Limited partner
12
6. The legal term for termination of a partnership
Dissolution
6
7. A legal contract forming a partnership and specifying
certain details of operation
Memorandum
entry
5
8. The implication that a creditor can look to all
partners' personal assets as well as the assets of the
partnership for payment of the firm's debts
Mutual agency
13
9. The amount of net income or net loss allocated to
each partner
Limited
partnership
11
10. Termination of a business by distributing all assets
and discontinuing the business
Liquidation
10
11. A partnership having one or more limited partners
Statement of
partners' equities
2
12. A member of a partnership whose liability is limited
to his or her investment in the partnership
Articles of
partnership
4
13. The characteristic of a partnership by which each
partner is empowered to act as an agent for the
partnership, binding the firm by his or her acts
Partnership
Partnership
3
