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23. Cleary, Wasser, and Nolan formed a partnership on January 1, 2010, with
investments of $100,000, $150,000, and $200,000, respectively. For division of
income, they agreed to (1) interest of 10% of the beginning capital balance each
year, (2) annual compensation of $10,000 to Wasser, and (3) sharing the
remainder of the income or loss in a ratio of 20% for Cleary, and 40% each for
Wasser and Nolan. Net income was $150,000 in 2010 and $180,000 in 2011. Each
partner withdrew $1,000 for personal use every month during 2010 and 2011.
What was the amount of interest attributed to Cleary for 2012?
24. Jell and Dell were partners with capital balances of $600 and $800 and an
income sharing ratio of 2:3. They admitted Zell to a 30% interest in the
partnership, and the total amount of goodwill credited to the original partners
was $700. What amount did Zell contribute to the business?
25. Jerry, a partner in the JSK partnership, begins the year on January 1, 2011
with a capital balance of $20,000. The JSK partnership agreement states that
Jerry receives 6% interest on this weighted average capital balance.
• On March 1, 2011, when the partnership tax return for 2010 was completed,
Jerry's capital account was credited for his share of 2010 profit of $120,000.
• Jerry withdrew this amount quarterly, beginning April 1.
• On September 1, Jerry's capital account was credited with a special bonus of
$60,000 for business he brought to the partnership.
What amount of interest will be attributed to Jerry for year 2011 that will go
toward his profit distribution for the year? (Use a 360-day year for calculations.)
26. A partnership began its first year of operations with the following capital
balances:
The Articles of Partnership stipulated that profits and losses be assigned in the
following manner:
Young was to be awarded an annual salary of $26,000 with $13,000 salary
assigned to Thurman.
Each partner was to be attributed with interest equal to 10% of the capital
balance as of the first day of the year.
The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and
Thurman, respectively.
Each partner withdrew $13,000 per year.
Assume that the
net loss
for the first year of operations was $26,000 with net
income of $52,000 in the second year.
What was Young's total share of net loss for the first year?
27. A partnership began its first year of operations with the following capital
balances:
The Articles of Partnership stipulated that profits and losses be assigned in the
following manner:
Young was to be awarded an annual salary of $26,000 with $13,000 salary
assigned to Thurman.
Each partner was to be attributed with interest equal to 10% of the capital
balance as of the first day of the year.
The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and
Thurman, respectively.
Each partner withdrew $13,000 per year.
Assume that the
net loss
for the first year of operations was $26,000 with net
income of $52,000 in the second year.
What was Eaton's total share of net loss for the first year?
28. A partnership began its first year of operations with the following capital
balances:
The Articles of Partnership stipulated that profits and losses be assigned in the
following manner:
Young was to be awarded an annual salary of $26,000 with $13,000 salary
assigned to Thurman.
Each partner was to be attributed with interest equal to 10% of the capital
balance as of the first day of the year.
The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and
Thurman, respectively.
Each partner withdrew $13,000 per year.
Assume that the
net loss
for the first year of operations was $26,000 with net
income of $52,000 in the second year.
What was Thurman's total share of net loss for the first year?
29. A partnership began its first year of operations with the following capital
balances:
The Articles of Partnership stipulated that profits and losses be assigned in the
following manner:
Young was to be awarded an annual salary of $26,000 with $13,000 salary
assigned to Thurman.
Each partner was to be attributed with interest equal to 10% of the capital
balance as of the first day of the year.
The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and
Thurman, respectively.
Each partner withdrew $13,000 per year.
Assume that the
net loss
for the first year of operations was $26,000 with net
income of $52,000 in the second year.
What was the balance in Young's Capital account at the end of the first year?
30. A partnership began its first year of operations with the following capital
balances:
The Articles of Partnership stipulated that profits and losses be assigned in the
following manner:
Young was to be awarded an annual salary of $26,000 with $13,000 salary
assigned to Thurman.
Each partner was to be attributed with interest equal to 10% of the capital
balance as of the first day of the year.
The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and
Thurman, respectively.
Each partner withdrew $13,000 per year.
Assume that the
net loss
for the first year of operations was $26,000 with net
income of $52,000 in the second year.
What was the balance in Eaton's Capital account at the end of the first year?
31. A partnership began its first year of operations with the following capital
balances:
The Articles of Partnership stipulated that profits and losses be assigned in the
following manner:
Young was to be awarded an annual salary of $26,000 with $13,000 salary
assigned to Thurman.
Each partner was to be attributed with interest equal to 10% of the capital
balance as of the first day of the year.
The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and
Thurman, respectively.
Each partner withdrew $13,000 per year.
Assume that the
net loss
for the first year of operations was $26,000 with net
income of $52,000 in the second year.
What was the balance in Thurman's Capital account at the end of the first year?
32. A partnership began its first year of operations with the following capital
balances:
The Articles of Partnership stipulated that profits and losses be assigned in the
following manner:
Young was to be awarded an annual salary of $26,000 with $13,000 salary
assigned to Thurman.
Each partner was to be attributed with interest equal to 10% of the capital
balance as of the first day of the year.
The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and
Thurman, respectively.
Each partner withdrew $13,000 per year.
Assume that the
net loss
for the first year of operations was $26,000 with net
income of $52,000 in the second year.
What was Young's total share of net income for the second year?
33. A partnership began its first year of operations with the following capital
balances:
The Articles of Partnership stipulated that profits and losses be assigned in the
following manner:
Young was to be awarded an annual salary of $26,000 with $13,000 salary
assigned to Thurman.
Each partner was to be attributed with interest equal to 10% of the capital
balance as of the first day of the year.
The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and
Thurman, respectively.
Each partner withdrew $13,000 per year.
Assume that the
net loss
for the first year of operations was $26,000 with net
income of $52,000 in the second year.
What was Eaton's total share of net income for the second year?
34. A partnership began its first year of operations with the following capital
balances:
The Articles of Partnership stipulated that profits and losses be assigned in the
following manner:
Young was to be awarded an annual salary of $26,000 with $13,000 salary
assigned to Thurman.
Each partner was to be attributed with interest equal to 10% of the capital
balance as of the first day of the year.
The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and
Thurman, respectively.
Each partner withdrew $13,000 per year.
Assume that the
net loss
for the first year of operations was $26,000 with net
income of $52,000 in the second year.
What was Thurman's total share of net income for the second year?
35. A partnership began its first year of operations with the following capital
balances:
The Articles of Partnership stipulated that profits and losses be assigned in the
following manner:
Young was to be awarded an annual salary of $26,000 with $13,000 salary
assigned to Thurman.
Each partner was to be attributed with interest equal to 10% of the capital
balance as of the first day of the year.
The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and
Thurman, respectively.
Each partner withdrew $13,000 per year.
Assume that the
net loss
for the first year of operations was $26,000 with net
income of $52,000 in the second year.
What was the balance in Young's Capital account at the end of the second year?
36. A partnership began its first year of operations with the following capital
balances:
The Articles of Partnership stipulated that profits and losses be assigned in the
following manner:
Young was to be awarded an annual salary of $26,000 with $13,000 salary
assigned to Thurman.
Each partner was to be attributed with interest equal to 10% of the capital
balance as of the first day of the year.
The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and
Thurman, respectively.
Each partner withdrew $13,000 per year.
Assume that the
net loss
for the first year of operations was $26,000 with net
income of $52,000 in the second year.
What was the balance in Eaton's Capital account at the end of the second year?
37. A partnership began its first year of operations with the following capital
balances:
The Articles of Partnership stipulated that profits and losses be assigned in the
following manner:
Young was to be awarded an annual salary of $26,000 with $13,000 salary
assigned to Thurman.
Each partner was to be attributed with interest equal to 10% of the capital
balance as of the first day of the year.
The remainder was to be assigned on a 5:2:3 basis to Young, Eaton, and
Thurman, respectively.
Each partner withdrew $13,000 per year.
Assume that the
net loss
for the first year of operations was $26,000 with net
income of $52,000 in the second year.
What was the balance in Thurman's Capital account at the end of the second
year?
38. Which of the following is
not
a characteristic of a partnership?
39. Partnerships have alternative legal forms including all of the following
except
:
40. Which of the following type of organization is classified as a partnership,
or similar to a partnership, for tax purposes?
(I.) Limited Liability Company
(II.) Limited Liability Partnership
(III.) Subchapter S Corporation
41. Which of the following statements is correct regarding the admission of a
new partner?
42. Withdrawals from the partnership capital accounts are typically
not
used
