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Question;41. A limited liability company (LLC);I. is governed by the laws of the state in which it is formed.;II. provides liability protection to its investors.;III. does not offer pass-through taxation benefits of partnerships.;A. Both I and III.;B. III;C. Both I and II;D. I, II, and II;42. If A is the total capital of a partnership before;the admission of a new partner, B is the total capital of the partnership after;the admission of the new partner, C is the amount of the new partner's;investment, and D is the amount of capital credited to the new partner, then;there is;A. goodwill to the new partner if B > (A + C) and D C.;C. a bonus to the new partner if B = A + C and D > C.;D. neither bonus nor goodwill if B > (A + C) and D > C.;43. The terms of a partnership agreement provide that;one of the partners is to receive a salary allowance of $30,000, plus a bonus;of 20 percent of income after deduction of the bonus and the salary allowance.;If income is $150,000, the bonus should be;A. $18,000;B. $20,000;C. $24,000;D. $30,000;44. The partnership of X and Y shares profits and;losses in the ratio of 60 percent to X and 40 percent to Y. For the year 2008;partnership net income was double X's withdrawals. Assume X's beginning capital;balance was $80,000, and ending capital balance (after closing) was $140,000.;Partnership net income for the year was;A. $120,000.;B. $300,000.;C. $500,000.;D. $600,000.;45. Shue, a partner in the Financial Brokers;Partnership, has a 30 percent share in partnership profits and losses. Shue's;capital account had a net decrease of $100,000 during 2008. During 2008, Shue;withdrew $240,000 as withdrawals and contributed equipment valued at $50,000 to;the partnership. What was the net income of the Financial Brokers Partnership;for 2008?;A. $633,334;B. $466,666;C. $300,000;D. $190,000;46. Transferable interest of a partner includes all of;the following except;A. the partner's share of the profits and losses of the partnership.;B. the right to receive distributions.;C. the right to receive any liquidating distribution.;D. the authority to transact any of the partnership's business operations.;Essay Questions;47. Net income for Levin-Tom partnership for 2009 was;$125,000. Levin and Tom have agreed to distribute partnership net income;according to the following plan;Additional Information for 2009 follows;1. Levin began the year with a capital balance of $75,000.;2. Tom began the year with a capital balance of $100,000.;3. On March 1, Levin invested an additional $25,000 into the partnership.;4. On October 1, Tom invested an additional $20,000 into the partnership.;5. Throughout 2009, each partner withdrew $200 per week in anticipation of;partnership net income. The partners agreed that these withdrawals are not to;be included in the computation of average capital balances for purposes of;income distributions.;Required;a. Prepare a schedule that discloses the distribution of partnership net income;for 2009. Show supporting computations in good form.;b. Prepare the statement of partners' capital at December 31, 2009.;c. How would your answer to part a change if all of the provisions of the;income distribution plan were the same except that the salaries were $45,000 to;Levin and $60,000 to Jack?;48. Paul and Ray sell musical instruments through;their partnership. To bring in additional funds and expertise, they decide to;admit Janet to the partnership. Paul's capital is $400,000, Ray's capital is;$200,000, and they share income in a ratio of 7:3, respectively.;Required;Record Janet's admission for each of the following independent situations;a) Janet invests $180,000 for a one-fourth interest. Goodwill is to be;recorded.;b) Paul and Ray agree that some of the inventory is obsolete. The inventory;account is decreased before Janet is admitted. Janet invests $190,000 for a;one-fourth interest.;49. Two sole proprietors, L and M, agreed to form a;partnership on January 1, 2009. The trial balance for each proprietorship is;shown below as of January 1, 2009.;The LM partnership will take over the assets and assume the liabilities of the;proprietors as of January 1, 2009.;Required;a) Prepare a balance sheet, for financial accounting purposes, for the LM;partnership as of January 1, 2009.;b) In addition, assume that M agreed to recognize the goodwill generated by L's;business. Accordingly, M agreed to recognize an amount for L's goodwill such;that L's capital equalled M's capital on January 1, 2009. Given this;alternative, how does the balance sheet prepared for requirement A;change?;50. The PQ partnership has the following plan for the;distribution of partnership net income (loss);Required;Calculate the distribution of partnership net income (loss) for each;independent situation below (for each situation, assume the average capital;balance of P is $140,000 and of Q is $240,000).;1. Partnership net income is $360,000.;2. Partnership net income is $240,000.;3. Partnership net loss is $40,000.;51. Miller and Davis, partners in a consulting;business, share profits and losses in the ratio of 3:2, respectively. Prior to;recording the admission of Shaw as a new partner, Miller has a capital balance;of $80,000, and Davis has a capital balance of $40,000.;Required;For each of the following independent cases, prepare the journal entry;that was made to record the admission of Shaw into the partnership.;1) Shaw purchased 20 percent of the respective capital balances of Miller and;Davis, paying $20,000 cash directly to each of them.;2) Shaw invested $30,000 cash in the partnership for a 20 percent ownership;interest. Total capital after recording his admission was $150,000.;3) Shaw invested $40,000 cash into the partnership for a 20 percent ownership;interest. Total capital after recording his admission was $160,000.;4) Shaw invested $50,000 into the partnership for a 20 percent interest.;Goodwill is to be recognized.;52. In the JAW partnership, Jane's capital is;$100,000, Anne's is $80,000, and William's is $75,000. They share income in a;3:2:1 ratio, respectively. William is retiring from the partnership.;Required;Prepare journal entries to record William's withdrawal according to each of the;following independent assumptions;a. William is paid $80,000, and no goodwill is recorded.;b. William is paid $85,000, and only his share of the goodwill is recorded.;c. William is paid $78,000, and all implied goodwill is recorded.;53. Apple and Betty are planning on beginning a new;business. They plan on forming a partnership. Apple will contribute $300,000;and will not be working. Betty will be working full time. They plan on;splitting profits equally. They approach you, as an accounting major, to;confirm their thoughts. What do you recommend?;54. The ABC partnership had net income of $100,000 for;2009. They allocate profits and losses in the ratio 5:3:2. After closing the;12/31/2009 books they discovered that $30,000 was spent on a piece of land in;December 2009 and was expensed. What should happen?

 

Paper#50934 | Written in 18-Jul-2015

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