Reference no: EM133031820

Questions -

Q1. Statement 1: If the total contributed capital of the partnership is greater than the total agreed capital, it is possible that a goodwill be recognized or an undervaluation of asset occurred.

Statement 2: Noncash assets sold by the partnership will prioritize payment of creditors.

S1 True; S2 False

S2 True; S1 False

Both statements are false

Both statements are true

Q2. Partners Alyssa and May divide profits and losses 6:4 with capital balances of $540,000 and $670,000 respectively. They agreed to admit Nica by her purchase of 1/4 of Alyssa's interest for $300,000. They agreed to write off Accounts Receivable worth $10,600. Fixed assets were under-depreciated by $30,000. Payments of accounts payable in the amount of $8,600 was not posted to the payable account. How much should be debited to Alyssa's interest?

Q3. Mary admits Jaja as a partner in the business. Balance sheet accounts of Mary just before the admission of Jaja shows: Cash, $43,000, Accounts Receivable, $150,000, Merchandise Inventory, $170,000, and Accounts Payable, $52,000. It was agreed that for purposes of establishing Mary's interest, the following adjustments should be made: 1) an allowance for doubtful accounts of 3% of accounts receivable is to be established; 2) merchandise inventory is to be increased by $25,000; and 3) prepaid expenses of $7,600 and accrued liabilities of $4,800 are to be recognized. If Jaja is to invest sufficient cash to obtain 2/5 interest in the partnership, how much should she contribute to the new business?

Q4. The partners of AAA Partnership are Delia, Nada, and Romina. During the current year, their average capital balances are as follows: Delia - $180,000; Nada - $160,000; Romina - $150,000. The articles of partnership provided the following terms: 1. Annual interest of 8% on their average capital balances. 2. Salary allowances as follows: Delia - $50,000 and Nada - $80,000. 3. Nada shall receive bonus of 15% of income in excess of $40,000 after partner's interest and salary allowances. 4. Residual profits shall be divided in the ratio of 2:2:6 to Delia, Nada and Romina. How much will Ana receive if the net income earned is $470,000?