43. The partnership contract for Hanes and Jones LLP provides that Hanes is
to receive a bonus of 20% of net income (after the bonus) and that the remaining
net income is to be divided equally. If the partnership income before the bonus
for the year is $57,600, Hanes’ share of this pre-bonus income is:
44. The partners of Apple, Bere, and Carroll LLP share net income and losses
in a 5:3:2 ratio, respectively. The capital account balances on January 1, 2011,
were as follows:
The carrying amounts of the assets and liabilities of the partnership are the
same as their current fair values. Dorr will be admitted to the partnership with a
20% capital interest and a 20% share of net income and losses in exchange for a
cash investment. The amount of cash that Dorr should invest in the partnership
is:
45. The appropriate format of the December 31, 2010 closing entry for John &
Hope Limited Liability Partnership, whose two partners had withdrawn their
salaries from the partnership during the year is:
46. When Danny withdrew from John, Daniel, Harry, and Danny, LLP, he was
paid $80,000, although his capital account balance was only $60,000. The four
partners shared net income and losses equally. The journal entry to record the
effect on John’s capital due to Danny’s withdrawal would include:
47. Max, Jones and Waters shared profits and losses 20%, 40%, and 40%
respectively and their partnership capital balance is $10,000, $30,000 and
$50,000 respectively. Max has decided to withdraw from the partnership. An
appraisal of the business and its property estimates the fair value to be
$200,000. Land with a book value of $30,000 has a fair value of $45,000. Max has
agreed to receive $20,000 in exchange for her partnership interest after
revaluation. At what amount should land be recorded on the partnership books?
48. The capital account balances for Donald & Hanes LLP on January 1, 2011,
were as follows:
Donald and Hanes shared net income and losses in the ratio of 3:2, respectively.
The partners agreed to admit May to the partnership with a 35% interest in
partnership capital and net income. May invested $100,000 cash, and no goodwill
was recognized.
What is the balance of May’s capital account after the new partnership is
created?
49. The capital account balances for Donald & Hanes LLP on January 1, 2011,
were as follows:
Donald and Hanes shared net income and losses in the ratio of 3:2, respectively.
The partners agreed to admit May to the partnership with a 35% interest in
partnership capital and net income. May invested $100,000 cash, and no goodwill
was recognized.
What is the balance of Donald’s capital account after the new partnership is
created?
50. The capital account balances for Donald & Hanes LLP on January 1, 2011,
were as follows:
Donald and Hanes shared net income and losses in the ratio of 3:2, respectively.
The partners agreed to admit May to the partnership with a 35% interest in
partnership capital and net income. May invested $100,000 cash, and no goodwill
was recognized.
What is the balance of Hanes’s capital account after the new partnership is
created?
51. The capital account balances for Donald & Hanes LLP on January 1, 2011,
were as follows:
Donald and Hanes shared net income and losses in the ratio of 3:2, respectively.
The partners agreed to admit May to the partnership with a 35% interest in
partnership capital and net income. May invested $100,000 cash, and no goodwill
was recognized.
What is the new total balance of the partnership accounts?
52. Which of the following could be used as a basis to allocate profits among
partners who are active in the management of the partnership?
1) allocation of salaries.
2) the number of years with the partnership.
3) the amount of time each partner works.
4) the average capital invested.
53. P, L, and O are partners with capital balances of $50,000, $30,000 and
$20,000 and who share in the profit and loss of the PLO partnership 30%, 20%,
and 50%, respectively, when they agree to admit C for a 20% interest.
If C is to contribute an amount equal to his book value share of the new
partnership, how much should C contribute?
54. P, L, and O are partners with capital balances of $50,000, $30,000 and
$20,000 and who share in the profit and loss of the PLO partnership 30%, 20%,
and 50%, respectively, when they agree to admit C for a 20% interest.
C contributes $38,000 to the partnership and the bonus method is used. What
amount will be credited for C’s beginning capital balance?
55. P, L, and O are partners with capital balances of $50,000, $30,000 and
$20,000 and who share in the profit and loss of the PLO partnership 30%, 20%,
and 50%, respectively, when they agree to admit C for a 20% interest.
If C contributes $40,000 to the partnership and the goodwill method is used,
what amount will be debited for goodwill?
56. P, L, and O are partners with capital balances of $50,000, $30,000 and
$20,000 and who share in the profit and loss of the PLO partnership 30%, 20%,
and 50%, respectively, when they agree to admit C for a 20% interest.
C contributes $10,000 to the partnership and the goodwill method is used. What
will be the result of the goodwill calculation?
57. Peter, Roberts, and Dana have the following capital balances; $80,000,
$100,000 and $60,000, respectively. The partners share profits and losses 20%,
40%, and 40% respectively.
Roberts retires and is paid $160,000 based on an independent appraisal of the
business. If the goodwill method is used, what is the capital balance of Peter?
58. Peter, Roberts, and Dana have the following capital balances; $80,000,
$100,000 and $60,000, respectively. The partners share profits and losses 20%,
40%, and 40% respectively.
Roberts retires and is paid $160,000 based on an independent appraisal of the
business. If the goodwill method is used, what is the capital balance of Dana?
59. Peter, Roberts, and Dana have the following capital balances; $80,000,
$100,000 and $60,000, respectively. The partners share profits and losses 20%,
40%, and 40% respectively.
What is the total partnership capital after Roberts retires receiving $160,000 and
using the goodwill method?
60. Donald, Anne, and Todd have the following capital balances; $40,000,
$50,000 and $30,000 respectively. The partners share profits and losses 20%,
40%, and 40% respectively.
Anne retires and is paid $80,000 based on an independent appraisal of the
business. If the goodwill method is used, what is the capital of the remaining
partners?
61. Donald, Anne, and Todd have the following capital balances; $40,000,
$50,000 and $30,000 respectively. The partners share profits and losses 20%,
40%, and 40% respectively.
Anne retires and is paid $80,000 based on the terms of the original partnership
agreement. If the bonus method is used, what is the capital of the remaining
partners?
62. Donald, Anne, and Todd have the following capital balances; $40,000,
$50,000 and $30,000 respectively. The partners share profits and losses 20%,
40%, and 40% respectively.
What is the total partnership capital after Anne retires receiving $80,000 and
using the bonus method?