Reference no: EM132592630
Questions -
Q1) When a limited liability company is formed,
a. the partnership activities are limited
b. all partners have limited liability
c. some of the partners have limited liability
d. None of the partners has limited liability
Q2) Which of the following is a disadvantage of a partnership when compared to a corporation?
a. The partnership is easier to organize.
b. The partnership has limited life.
c. The partnership is less expensive to organize.
d. The partnership is more likely to have a net loss.
Q3) A partner withdraws from a partnership by selling her interest to another person who currently is not associated with the firm. As a result of this transaction, the capital account balance of the other partners in the partnership
a. will remain the same
b. may increase, decrease, or remain the same
c. will decrease
d. will increase
Q4) Singer and McMann are partners in a business. Singer's original capital was $40,000 and McMann's was $60,000. They agree to salaries of $12,000 and $18,000 for Singer and McMann, respectively, and 10% interest on original capital. If they agree to share the remaining profits and losses on a 3:2 ratio, what will Singer's share of the income be if the income for the year is $50,000?
a. $22,000
b. $23,400
c. $24,000
d. $16,000
Q5) Xavier and Yolanda have original investments of $50,000 and $100,000, respectively, in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 20%; salary allowances of $27,000 and $18,000, respectively; and the remainder to be divided equally. How much of the net income of $81,000 is allocated to Xavier?
a. $42,500
b. $42,000
c. $40,000
d. $37,000
Q6) Sandra and Kelsey are forming a partnership. Sandra will invest a piece of equipment with a book value of $4,600 and a fair market value of $11,700. Kelsey will invest a building with a book value of $40,600 and a fair market value of $68,700.
What amount will be recorded to Sandra's capital account?
a. $11,700
b. $40,600
c. $68,700
d. $4,600
Q7) Tucker and Titus are partners who share income in the ratio of 3:1. Their capital balances are $37,700 and $75,500, respectively. The partnership generated net income of $40,100 for the year. What is Tucker's capital balance after closing the revenue and expense accounts to the capital accounts?
a. $40,665
b. $54,220
c. $67,775
d. $81,330
Q8) Henry Jones contributed equipment, inventory, and $46,000 cash to a partnership. The equipment had a book value of $25,100 and market value of $35,500. The inventory had a book value of $56,400 but only had a market value of $11,700 due to obsolescence. The partnership also assumed a $14,900 note payable owed by Henry that was originally used to purchase the equipment.
What amount should be recorded to Henry's capital account?
a. $142,400
b. $112,600
c. $78,300
d. $123,000
Q9) Jesse and Tim form a partnership by combining the assets of their separate businesses. Jesse contributes accounts receivable with a face amount of $49,000 and equipment with a cost of $178,000 and accumulated depreciation of $96,000. The partners agree that the equipment is to be valued at $68,300, that $3,300 of the accounts receivable are completely worthless and are not to be accepted by the partnership, and that $2,500 is a reasonable allowance for the uncollectibility of the remaining accounts receivable. Tim contributes cash of $20,500 and merchandise inventory of $45,500. The partners agree that the merchandise inventory is to be valued at $49,000.
Journalize the entries to record in the partnership accounts (a) Jesse's investment and (b) Tim's investment.