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Chapter 14

Partnerships: Formation and Operation


Multiple Choice Questions
1. Cherryhill and Hace had been partners for several
years, and they decided to admit Quincy to the partnership.
The accountant for the partnership believed that the
dissolved partnership and the newly formed partnership
were two separate entities. What method would the
accountant have used for recording the admission of Quincy
to the partnership?
A. the bonus method.
B. the equity method.
C. the goodwill method.
D. the proportionate method.
E. the cost method.
2. When the hybrid method is used to record the
withdrawal of a partner, the partnership
A. revalues assets and liabilities and records goodwill to the
continuing partner but not to the withdrawing partner.
B. revalues liabilities but not assets, and no goodwill is
recorded.
C. can recognize goodwill but does not revalue assets and
liabilities.
D. revalues assets but not liabilities, and records goodwill
to the continuing partner but not to the withdrawing partner.
E. revalues assets and liabilities but does not record
goodwill.
3. The disadvantages of the partnership form of business
organization, compared to corporations, include
A. the legal requirements for formation.
B. unlimited liability for the partners.
C. the requirement for the partnership to pay income taxes.

D. the extent of governmental regulation.


E. the complexity of operations.
4. The advantages of the partnership form of business
organization, compared to corporations, include
A. single taxation.
B. ease of raising capital.
C. mutual agency.
D. limited liability.
E. difficulty of formation.
5. The dissolution of a partnership occurs
A. only when the partnership sells its assets and
permanently closes its books.
B. only when a partner leaves the partnership.
C. at the end of each year, when income is allocated to the
partners.
D. only when a new partner is admitted to the partnership.
E. when there is any change in the individuals who make
up the partnership.
6. The partnership of Clapton, Seidel, and Thomas was
insolvent and will be unable to pay $30,000 in liabilities
currently due. What recourse was available to the
partnership's creditors?
A. they must present equal claims to the three partners as
individuals.
B. they must try obtain a payment from the partner with the
largest capital account balance.
C. they cannot seek remuneration from the partners as
individuals.
D. they may seek remuneration from any partner they
choose.
E. they must present their claims to the three partners in
the order of the partners' capital account balances.

7. Cleary, Wasser, and Nolan formed a partnership on


January 1, 2012, 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 2012 and $180,000 in
2013. Each partner withdrew $1,000 for personal use every
month during 2012 and 2013.
What was Wasser's total share of net income for 2012?
A. $63,000.
B. $53,000.
C. $58,000.
D. $29,000.
E. $51,000.
8. Cleary, Wasser, and Nolan formed a partnership on
January 1, 2012, 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 2012 and $180,000 in
2013. Each partner withdrew $1,000 for personal use every
month during 2012 and 2013.
What was Nolan's total share of net income for 2012?
A. $63,000.
B. $53,000.
C. $58,000.
D. $29,000.
E. $51,000.
9.

Cleary, Wasser, and Nolan formed a partnership on

January 1, 2012, 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 2012 and $180,000 in
2013. Each partner withdrew $1,000 for personal use every
month during 2012 and 2013.
What was Cleary's total share of net income for 2012?
A. $63,000.
B. $53,000.
C. $58,000.
D. $29,000.
E. $51,000.
10. Cleary, Wasser, and Nolan formed a partnership on
January 1, 2012, 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 2012 and $180,000 in
2013. Each partner withdrew $1,000 for personal use every
month during 2012 and 2013.
What was Nolan's capital balance at the end of 2012?
A. $200,000.
B. $224,000.
C. $238,000.
D. $246,000.
E. $254,000.
11. Cleary, Wasser, and Nolan formed a partnership on
January 1, 2012, 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 2012 and $180,000 in
2013. Each partner withdrew $1,000 for personal use every
month during 2012 and 2013.
What was Wasser's capital balance at the end of 2012?
A. $150,000.
B. $160,000.
C. $165,000.
D. $213,000.
E. $201,000.
12. Cleary, Wasser, and Nolan formed a partnership on
January 1, 2012, 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 2012 and $180,000 in
2013. Each partner withdrew $1,000 for personal use every
month during 2012 and 2013.
What was Cleary's capital balance at the end of 2012?
A. $100,000.
B. $117,000.
C. $119,000.
D. $129,000.
E. $153,000.
13. Cleary, Wasser, and Nolan formed a partnership on
January 1, 2012, 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 2012 and $180,000 in
2013. Each partner withdrew $1,000 for personal use every
month during 2012 and 2013.
What was the total capital balance for the partnership at
December 31, 2012?
A. $600,000
B. $564,000
C. $535,000
D. $523,000
E. $545,000
14. Cleary, Wasser, and Nolan formed a partnership on
January 1, 2012, 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 2012 and $180,000 in
2013. Each partner withdrew $1,000 for personal use every
month during 2012 and 2013.
What was the amount of interest attributed to Wasser for
2013?
A. $17,600
B. $18,800
C. $20,100
D. $17,800
E. $30,100
15. Cleary, Wasser, and Nolan formed a partnership on
January 1, 2012, 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 2012 and $180,000 in
2013. Each partner withdrew $1,000 for personal use every
month during 2012 and 2013.
What was Wasser's total share of net income for 2013?
A. $34,420.
B. $75,540.
C. $65,540.
D. $70,040.
E. $61,420.
16. Cleary, Wasser, and Nolan formed a partnership on
January 1, 2012, 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 2012 and $180,000 in
2013. Each partner withdrew $1,000 for personal use every
month during 2012 and 2013.
What was the remainder portion of net income allocated to
Nolan for 2013?
A. $45,440
B. $58,040
C. $70,040
D. $72,000
E. $82,040
17. Cleary, Wasser, and Nolan formed a partnership on
January 1, 2012, 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 2012 and $180,000 in
2013. Each partner withdrew $1,000 for personal use every
month during 2012 and 2013.
What was Nolan's total share of net income for 2013?
A. $34,420.
B. $75,540.
C. $65,540.
D. $70,040.
E. $61,420.
18. Cleary, Wasser, and Nolan formed a partnership on
January 1, 2012, 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 2012 and $180,000 in
2013. Each partner withdrew $1,000 for personal use every
month during 2012 and 2013.
What was Cleary's total share of net income for 2013?
A. $34,420.
B. $75,540.
C. $65,540.
D. $70,040.
E. $61,420.
19. Cleary, Wasser, and Nolan formed a partnership on
January 1, 2012, 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 2012 and $180,000 in
2013. Each partner withdrew $1,000 for personal use every
month during 2012 and 2013.
What was Nolan's capital balance at the end of 2013?
A. $139,420.
B. $246,000.
C. $276,540.
D. $279,440.
E. $304,040.
20. Cleary, Wasser, and Nolan formed a partnership on
January 1, 2012, 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 2012 and $180,000 in
2013. Each partner withdrew $1,000 for personal use every
month during 2012 and 2013.
What was Wasser's capital balance at the end of 2013?
A. $201,000.
B. $263,520.
C. $264,540.
D. $304,040.
E. $313,780.
21. Cleary, Wasser, and Nolan formed a partnership on
January 1, 2012, 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 2012 and $180,000 in
2013. Each partner withdrew $1,000 for personal use every
month during 2012 and 2013.
What was Cleary's capital account balance at the end of
2013?
A. $163,420.
B. $151,420.
C. $139,420.
D. $100,000.
E. $142,000.
22. Cleary, Wasser, and Nolan formed a partnership on
January 1, 2012, 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 2012 and $180,000 in
2013. Each partner withdrew $1,000 for personal use every
month during 2012 and 2013.
What was the total capital balance for the partnership at
December 31, 2013?
A. $852,000
B. $780,000
C. $708,000
D. $744,000
E. $594,000
23. Cleary, Wasser, and Nolan formed a partnership on
January 1, 2012, 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 2012 and $180,000 in
2013. Each partner withdrew $1,000 for personal use every
month during 2012 and 2013.
What will be the amount of interest attributed to Cleary for
2014?
A. $15,142
B. $13,942
C. $12,942
D. $14,142
E. $10,000
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?
A. $900.
B. $560.
C. $600.
D. $590.
E. $630.
25. Jerry, a partner in the JSK partnership, begins the year
on January 1, 2013 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, 2013, when the partnership tax return for 2012
was completed, Jerry's capital account was credited for his
share of 2012 profit of $120,000.
Jerry withdrew $5,000 quarterly, beginning March 31st.
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
2013 that will go toward his profit distribution for the year?
(Use a 360-day year for calculations.)
A. $5,250
B. $6,000
C. $6,400
D. $7,000
E. $7,200
26. A partnership began its first year of operations with the
following capital balances:
Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
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?
A. $3,900 loss.
B. $11,700 loss.
C. $10,400 loss.
D. $24,700 loss.
E. $9,100 loss.
27. A partnership began its first year of operations with the

following capital balances:


Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
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?
A. $3,900 loss.
B. $11,700 loss.
C. $10,400 loss.
D. $24,700 loss.
E. $9,100 loss.
28. A partnership began its first year of operations with the
following capital balances:
Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
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?
A. $3,900 loss.
B. $11,700 loss.
C. $10,400 loss.
D. $24,700 loss.
E. $9,100 loss.
29. A partnership began its first year of operations with the
following capital balances:
Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
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?
A. $120,900.
B. $118,300.
C. $126,100.
D. $80,600.
E. $111,500.
30. A partnership began its first year of operations with the

following capital balances:


Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
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?
A. $120,900.
B. $118,300.
C. $126,100.
D. $80,600.
E. $111,500.
31. A partnership began its first year of operations with the
following capital balances:
Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
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?
A. $120,900.
B. $118,300.
C. $126,100.
D. $80,600.
E. $111,500.
32. A partnership began its first year of operations with the
following capital balances:
Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
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?
A. $17,160 income.
B. $4,160 income.
C. $19,760 income.
D. $17,290 income.
E. $28,080 income.

33. A partnership began its first year of operations with the


following capital balances:
Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
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?
A. $17,160 income.
B. $4,160 income.
C. $19,760 income.
D. $17,290 income.
E. $28,080 income.
34. A partnership began its first year of operations with the
following capital balances:
Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
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?
A. $17,160 income.
B. $4,160 income.
C. $19,760 income.
D. $17,290 income.
E. $28,080 income.
35. A partnership began its first year of operations with the
following capital balances:
Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
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?
A. $133,380.
B. $84,760.
C. $105,690.
D. $132,860.

E. $71,760.
36. A partnership began its first year of operations with the
following capital balances:
Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
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?
A. $133,380.
B. $84,760.
C. $105,690.
D. $132,860.
E. $71,760.
37. A partnership began its first year of operations with the
following capital balances:
Young, Capital: $143,000
Eaton, Capital: $104,000
Thurman, Capital: $143,000
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?
A. $133,380.
B. $84,760.
C. $105,690.
D. $132,860.
E. $71,760.
38. Which of the following is not a characteristic of a
partnership?
A. The partnership itself pays no income taxes.
B. It is easy to form a partnership.
C. Any partner can be held personally liable for all debts of
the business.
D. A partnership requires written Articles of Partnership.
E. Each partner has the power to obligate the partnership
for liabilities.
39. Partnerships have alternative legal forms including all of
the following except:
A. General Partnership.
B. Limited Partnership.
C. Subchapter S Partnership.
D. Limited Liability Partnership.
E. Limited Liability Company.
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
A. II only.
B. II and III.
C. I and II.
D. I and III.
E. I, II, and III.
41. Which of the following statements is correct regarding
the admission of a new partner?
A. A new partner must purchase a partnership interest
directly from the business.
B. The right of co-ownership in the business property can
be transferred to a new partner without the consent of other
existing partners.
C. The right to participate in management of the business
cannot be conveyed without the consent of other existing
partners.
D. The right to share in profits and losses can be sold to a
new partner without the consent of other existing partners.
E. A new partner always pays book value.
42. Withdrawals from the partnership capital accounts are
typically not used
A. to reward partners for work performed in the business.
B. to reduce the partners' capital account balances at the
end of an accounting period.
C. to record interest earned on a partner's capital balance.
D. to reduce the basic investment that has been made in
the business.
E. to record the partnership's payment of a partner's
personal expense such as income tax.

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 prebonus income is:
A. $28,800.
B. $33,600.
C. $34,560.
D. $35,520.
E. $38,400.
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, 2013, 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:
A. $25,000.
B. $30,000.
C. $37,500.
D. $75,000.
E. $90,000.
45. The appropriate format of the December 31, 2012
closing entry for John & Hope Limited Liability Partnership,
whose two partners had withdrawn their salaries from the
partnership during the year is:
A. Option A
B. Option B
C. Option C
D. Option D

E. Option E
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:
A. $6,667 debit to John, Capital.
B. $6,667 credit to John, Capital.
C. $20,000 debit to John, Capital.
D. $5,000 debit to John, Capital.
E. $5,000 credit to John, Capital.
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?
A. $20,000.
B. $30,000.
C. $45,000.
D. $50,000.
E. $200,000.
48. The capital account balances for Donald & Hanes LLP
on January 1, 2013, 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?
A. $84,000.
B. $100,000.
C. $140,000.
D. $176,000.
E. $200,000.
49. The capital account balances for Donald & Hanes LLP
on January 1, 2013, 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?
A. $84,000.
B. $100,000.
C. $140,000.
D. $176,000.
E. $200,000.
50. The capital account balances for Donald & Hanes LLP
on January 1, 2013, 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?
A. $84,000.

B.
C.
D.
E.

$100,000.
$140,000.
$176,000.
$200,000.

51. The capital account balances for Donald & Hanes LLP
on January 1, 2013, 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?
A. $84,000.
B. $140,000.
C. $176,000.
D. $200,000.
E. $400,000.
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.
A. 1 and 2.
B. 1 and 3.
C. 1, 2, and 4.
D. 1, 3, and 4.
E. 1, 2, 3, and 4.
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?
A. $22,000
B. $20,000
C. $25,000
D. $18,000
E. $10,000
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?
A. $20,000
B. $25,000
C. $27,600
D. $32,600
E. $38,000
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?
A. $15,000
B. $20,000
C. $25,000
D. $28,000
E. $60,000
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?
A. Goodwill of $15,000; split among the original partners.
B. Goodwill of $15,000; all to C.
C. Goodwill of $15,000; split among all four partners: P, L,
O, and C.
D. Goodwill of $12,000; all to C.
E. Goodwill of $12,000; split among original partners.
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?
A. $20,000.
B. $60,000.
C. $110,000.
D. $120,000.
E. $230,000.
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?
A. $20,000.
B. $60,000.

C. $110,000.
D. $120,000.
E. $230,000.
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?
A. $290,000.
B. $176,000.
C. $80,000.
D. $120,000.
E. $230,000.
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?
A. Donald, $55,000; Todd, $60,000
B. Donald, $40,000; Todd, $30,000
C. Donald, $65,000; Todd, $55,000
D. Donald, $15,000; Todd, $30,000
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?

A.
B.
C.
D.

Donald, $40,000; Todd, $30,000


Donald, $30,000; Todd, $10,000
Donald, $50,000; Todd, $50,000
Donald, $24,000; Todd, $18,000

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?
A. $70,000.
B. $40,000.
C. $60,000.
D. $80,000.
E. $42,000.
1. When a partnership is insolvent and a partner has a
deficit capital balance, that partner is legally required to:
A. declare personal bankruptcy.
B. initiate legal proceedings against the partnership.
C. contribute cash to the partnership.
D. deliver a note payable to the partnership with specific
payment terms.
E. None of these. The partner has no legal responsibility to
cover the capital deficit balance.
2. The Abrams, Bartle, and Creighton partnership began
the process of liquidation with the following balance sheet:
Abrams, Bartle, and Creighton share profits and losses in a
ratio of 3:2:5. Liquidation expenses are expected to be
$12,000.
If the noncash assets were sold for $234,000, what amount
of the loss would have been allocated to Bartle?
A. $43,200.

B.
C.
D.
E.

$46,800.
$40,000.
$42,400.
$43,100.

3. The Abrams, Bartle, and Creighton partnership began


the process of liquidation with the following balance sheet:
Abrams, Bartle, and Creighton share profits and losses in a
ratio of 3:2:5. Liquidation expenses are expected to be
$12,000.
The noncash assets were sold for $134,000. Which
partner(s) would have had to contribute assets to the
partnership to cover a deficit in his or her capital account?
A. Abrams.
B. Bartle.
C. Creighton.
D. Abrams and Creighton.
E. Abrams and Bartle.
4. The Abrams, Bartle, and Creighton partnership began
the process of liquidation with the following balance sheet:
Abrams, Bartle, and Creighton share profits and losses in a
ratio of 3:2:5. Liquidation expenses are expected to be
$12,000.
After the liquidation expenses of $12,000 were paid and the
noncash assets sold, Creighton had a deficit of $8,000. For
what amount were the noncash assets sold?
A. $170,000.
B. $264,000.
C. $158,000.
D. $146,000.
E. $185,000.
5. The Keaton, Lewis, and Meador partnership had the
following balance sheet just before entering liquidation:

Keaton, Lewis, and Meador share profits and losses in a


ratio of 2:4:4. Noncash assets were sold for $180,000.
Liquidation expenses were $10,000.
Assume that Lewis was personally insolvent and could not
contribute any assets to the partnership, while Keaton and
Meador were both solvent. What amount of cash would
Keaton have received from the distribution of partnership
assets?
A. $38,000.
B. $30,000.
C. $24,000.
D. $34,000.
E. $31,600.
6. The Keaton, Lewis, and Meador partnership had the
following balance sheet just before entering liquidation:
Keaton, Lewis, and Meador share profits and losses in a
ratio of 2:4:4. Noncash assets were sold for $60,000. How
much will each partner receive in the liquidation?
A. Option A
B. Option B
C. Option C
D. Option D
E. Option E
7. The Keaton, Lewis, and Meador partnership had the
following balance sheet just before entering liquidation:
Keaton, Lewis, and Meador share profits and losses in a
ratio of 2:4:4. The partnership feels confident it will be able to
eventually sell the noncash assets and wants to distribute
some cash before paying liabilities. How much would each
partner receive of a total $60,000 distribution of cash?
A. Option A
B. Option B
C. Option C

D. Option D
E. Option E
8. The Henry, Isaac, and Jacobs partnership was about to
enter liquidation with the following account balances:
Estimated expenses of liquidation were $5,000. Henry,
Isaac, and Jacobs shared profits and losses in a ratio of
2:4:4.
What amount of cash was available for safe payments,
based on the above information?
A. $30,000.
B. $85,000.
C. $25,000.
D. $35,000.
E. $40,000.
9. The Henry, Isaac, and Jacobs partnership was about to
enter liquidation with the following account balances:
Estimated expenses of liquidation were $5,000. Henry,
Isaac, and Jacobs shared profits and losses in a ratio of
2:4:4.
Before liquidating any assets, the partners determined the
amount of cash available for safe payments. How should the
amount of safe cash payments be distributed?
A. in a ratio of 2:4:4 among all the partners.
B. $18,333 to Henry and $16,667 to Jacobs.
C. in a ratio of 1:2 between Henry and Jacobs.
D. $15,000 to Henry and $10,000 to Jacobs.
E. $21,667 to Henry and $3,333 to Jacobs.
10. The Henry, Isaac, and Jacobs partnership was about to
enter liquidation with the following account balances:
Estimated expenses of liquidation were $5,000. Henry,
Isaac, and Jacobs shared profits and losses in a ratio of
2:4:4.

Before liquidating any assets, the partners determined the


amount of cash for safe payments and distributed it. The
noncash assets were then sold for $120,000. The liquidation
expenses of $5,000 were paid. How would the $120,000 be
distributed to the partners? (Hint: Either a predistribution
plan or a schedule of safe payments would be appropriate
for solving this item.)
A. Option A
B. Option B
C. Option C
D. Option D
E. Option E
11. The following account balances were available for the
Perry, Quincy, and Renquist partnership just before it
entered liquidation:
Included in Perry's capital balance is a $20,000 partnership
loan owed to Perry. Perry, Quincy, and Renquist shared
profits and losses in a ratio of 2:4:4. Liquidation expenses
were expected to be $15,000.
All partners were solvent.
What amount would noncash assets need to be sold for in
order for any partner to receive some cash?
A. $185,000
B. $170,000
C. $165,000
D. $95,000
E. $90,000
12. The following account balances were available for the
Perry, Quincy, and Renquist partnership just before it
entered liquidation:
Included in Perry's capital balance is a $20,000 partnership
loan owed to Perry. Perry, Quincy, and Renquist shared
profits and losses in a ratio of 2:4:4. Liquidation expenses

were expected to be $15,000.


All partners were solvent.
What would be the minimum amount for which the noncash
assets must have been sold, in order for Quincy to receive
some cash from the liquidation?
A. any amount in excess of $170,000.
B. any amount in excess of $190,000.
C. any amount in excess of $260,000.
D. any amount in excess of $280,000.
E. any amount in excess of $300,000.
13. A local partnership was in the process of liquidating and
reported the following capital balances:
Douglass indicated that the $14,000 deficit would be covered
by a forthcoming contribution. However, the two remaining
partners asked to receive the $31,000 that was then in the
cash account.
How much of this money should Justice receive?
A. $15,467.
B. $15,533.
C. $17,333.
D. $16,533.
E. $15,867.
14. A local partnership was in the process of liquidating and
reported the following capital balances:
Douglass indicated that the $14,000 deficit would be covered
by a forthcoming contribution. However, the two remaining
partners asked to receive the $31,000 that was then in the
cash account.
How much of this money should Zobart receive?
A. $15,467.
B. $14,467.
C. $17,333.
D. $15,633.

E. $15,867.
15. A local partnership was considering the possibility of
liquidation since one of the partners (Ding) was personally
insolvent. Capital balances at that time were as follows.
Profits and losses were divided on a 4:2:2:2 basis,
respectively.
Creditors of partner Ding filed a $25,000 claim against the
partnership's assets. At that time, the partnership held
noncash assets reported at $360,000 and liabilities of
$120,000. There was no cash on hand at the time.
If the assets could be sold for $228,000, what is the
minimum amount that Ding's creditors would have received?
A. $36,000.
B. $0.
C. $2,500.
D. $38,720.
E. $67,250.
16. A local partnership was considering the possibility of
liquidation since one of the partners (Ding) was personally
insolvent. Capital balances at that time were as follows.
Profits and losses were divided on a 4:2:2:2 basis,
respectively.
Creditors of partner Ding filed a $25,000 claim against the
partnership's assets. At that time, the partnership held
noncash assets reported at $360,000 and liabilities of
$120,000. There was no cash on hand at the time.
If the assets could be sold for $228,000, what is the
minimum amount that Laurel's creditors would have
received?
A. $36,000.
B. $0.
C. $2,500.
D. $38,250.

E. $67,250.
17. A local partnership was considering the possibility of
liquidation since one of the partners (Ding) was personally
insolvent. Capital balances at that time were as follows.
Profits and losses were divided on a 4:2:2:2 basis,
respectively.
Creditors of partner Ding filed a $25,000 claim against the
partnership's assets. At that time, the partnership held
noncash assets reported at $360,000 and liabilities of
$120,000. There was no cash on hand at the time.
If the assets could be sold for $228,000, what is the
minimum amount that Ezzard's creditors would have
received?
A. $36,000.
B. $0.
C. $2,500.
D. $38,250.
E. $67,250.
18. A local partnership was considering the possibility of
liquidation since one of the partners (Ding) was personally
insolvent. Capital balances at that time were as follows.
Profits and losses were divided on a 4:2:2:2 basis,
respectively.
Creditors of partner Ding filed a $25,000 claim against the
partnership's assets. At that time, the partnership held
noncash assets reported at $360,000 and liabilities of
$120,000. There was no cash on hand at the time.
If the assets could be sold, for $228,000 what is the
minimum amount that Tillman's creditors would have
received?
A. $36,000.
B. $0.
C. $2,500.

D. $38,250.
E. $67,250.
19. Dancey, Reese, Newman, and Jahn were partners who
shared profits and losses on a 4:2:2:2 basis, respectively.
They were beginning to liquidate their business. At the start
of the process, capital balances were as follows:
Which one of the following statements is true for a
predistribution plan?
A. The first available $16,000 would go to Newman.
B. The first available $20,000 would go to Dancey.
C. The first available $8,000 would go to Jahn.
D. The first available $8,000 would go to Newman.
E. The first available $4,000 would go to Jahn.
20. Dancey, Reese, Newman, and Jahn were partners who
shared profits and losses on a 4:2:2:2 basis, respectively.
They were beginning to liquidate their business. At the start
of the process, capital balances were as follows:
Which one of the following statements is true for a
predistribution plan?
A. The first available $16,000 would go to Newman. The
next $12,000 would go $8,000 to Dancey and $4,000 to
Newman. The following $32,000 would be shared by
Dancey, Reese, and Newman. The total distribution would
be $60,000 before all four partners share any further
payments equally.
B. The first available $16,000 would go to Newman. The
next $12,000 would go $8,000 to Dancey and $4,000 to
Newman. The following $32,000 would be shared by
Dancey, Reese, and Newman. The total distribution would
be $60,000 before all four partners share any further
payments in their profit and loss sharing ratios.
C. The first $20,000 would go to Newman. The next $8,000
would go to Dancey. The next $12,000 would be shared by

Dancey, Reese, and Newman. The total distribution would


be $40,000 before all four partners share any further
payments equally.
D. The first available $8,000 would go to Newman. The
next $4,000 would be split equally between Dancey and
Newman. The following $12,000 would be shared by
Dancey, Reese, and Newman. The total distribution would
be $24,000 before all four partners share any further
payments equally.
E. The first available $8,000 would go to Newman. The next
$4,000 would be split equally between Dancey and
Newman. The following $12,000 would be shared by
Dancey, Reese, and Newman. The total distribution would
be $24,000 before all four partners share any further
payments in their profit and loss sharing ratios.
21. Which of the following could result in the termination and
liquidation of a partnership?
1) Partners are incompatible and choose to cease
operations.
2) There are excessive losses that are expected to continue.
3) Retirement of a partner.
A. 1 only
B. 1 and 2 only
C. 2 and 3 only
D. 3 only
E. 1, 2, and 3
22. What accounting transactions are not recorded by an
accountant during partnership liquidation?
A. The conversion of partnership assets into cash.
B. The allocation of gains and losses from sales of assets.
C. The payment of liabilities and expenses.
D. The initiation of legal action by creditors of the
partnership.

E. Write-off of remaining unpaid debts.


23. Which of the following statements is false concerning
the partnership Schedule of Liquidation?
A. Liquidations may take a considerable length of time to
complete.
B. Frequent reporting by the accountant is rarely necessary.
C. The Schedule of Liquidation provides a listing of
transactions to date, current cash, and capital balances.
D. The Schedule of Liquidation provides a listing of property
still held by the partnership as well as liabilities remaining
unpaid.
E. The Schedule of Liquidation keeps creditors and
partners apprised of the results of the process of dissolution.
24. What is the preferred method of resolving a partner's
deficit balance, according to the Uniform Partnership Act?
A. Partners never have a deficit balance.
B. The other partners must contribute personal assets to
cover the deficit balance.
C. The partnership must sell assets in order to cover the
deficit balance.
D. The partner with a deficit balance must contribute
personal assets to cover the deficit balance.
E. The partner with a deficit balance contributes personal
assets only if those personal assets exceed personal
liabilities.
25. Which of the following statements is true concerning the
distribution of safe payments?
A. The distribution of safe payments assumes that any
capital deficit balances will prove to be a total loss to the
partnership.
B. Safe payments are equal to the recorded capital
balances of partners with positive capital balances.

C. The distribution of safe payments may only be made


after all liabilities have been paid.
D. In computing safe payments, partners with positive
capital balances are assumed to absorb an equal share of
any deficit balance(s).
E. There are no safe payments until the liquidation is
complete.
26. Which one of the following statements is correct?
A. If a partner of a liquidating partnership is unable to pay a
capital account deficit, the deficit is absorbed by the other
partners in the profit and loss ratio of those partners.
B. Gains and losses from the sale of noncash assets are
divided in the ratio of the partners' capital account balances
if there is no income-sharing plan in the partnership contract.
C. A loan receivable from a partner is added to the partner's
capital account balance in the preparation of a cash
distribution plan.
D. Partners may not receive any cash before partnership
creditors receive cash when liquidating a partnership.
E. All cash payments to partners are made using their profit
and loss ratio when liquidating the partnership.
27. Which item is not shown on the schedule of partnership
liquidation?
A. Current cash balances.
B. Property owned by the partnership.
C. Liabilities still to be paid.
D. Personal assets of the partners.
E. Current capital balances of the partners.
28. Harding, Jones, and Sandy is in the process of
liquidating and the partners have the following capital
balances; $24,000, $24,000, and ($9,000) respectively. The
partners share all profits and losses 16%, 48%, and 36%,

respectively. Sandy has indicated that the ($9,000) deficit will


be covered with a forthcoming contribution. The remaining
partners have requested to immediately receive $20,000 in
cash that is available. How should this cash be distributed?
A. Harding $5,000; Jones $15,000.
B. Harding $17,000; Jones $3,000.
C. Harding $11,154; Jones $8,846.
D. Harding $14,297; Jones $5,703.
E. Harding $12,500; Jones $7,500.
29. Gonda, Herron, and Morse is considering possible
liquidation because partner Morse is personally insolvent.
The partners have the following capital balances: $60,000,
$70,000, and $40,000, respectively, and share profits and
losses 30%, 45%, and 25%, respectively. The partnership
has $200,000 in noncash assets that can be sold for
$150,000. The partnership has $10,000 cash on hand, and
$40,000 in liabilities. What is the minimum that partner
Morse's creditors would receive if they have filed a claim for
$50,000?
A. $0.
B. $27,500.
C. $45,000.
D. $47,500.
E. $50,000.
30. White, Sands, and Luke has the following capital
balances and profit and loss ratios:
$60,000 (30%); $100,000 (20%); and $200,000 (50%).
The partnership has received a predistribution plan.
How would $90,000 be distributed?
A. Option A
B. Option B
C. Option C
D. Option D

E. Option E
31. White, Sands, and Luke has the following capital
balances and profit and loss ratios:
$60,000 (30%); $100,000 (20%); and $200,000 (50%).
The partnership has received a predistribution plan.
How would $200,000 be distributed?
A. Option A
B. Option B
C. Option C
D. Option D
E. Option E
32. A local partnership has assets of cash of $5,000 and a
building recorded at $80,000. All liabilities have been paid.
The partners' capital accounts are as follows Harry $40,000,
Landers $30,000 and Waters 15,000. The partners share
profits and losses 4:4:2.
If the building is sold for $50,000, how much cash will Harry
receive in the final settlement?
A. $5,000.
B. $9,000.
C. $18,000.
D. $28,000.
E. $55,000.
33. A local partnership has assets of cash of $5,000 and a
building recorded at $80,000. All liabilities have been paid.
The partners' capital accounts are as follows Harry $40,000,
Landers $30,000 and Waters 15,000. The partners share
profits and losses 4:4:2.
If the building is sold for $50,000, how much cash will Waters
receive in the final settlement?
A. $5,000.
B. $9,000.

C. $18,000.
D. $28,000.
E. $55,000.
34. A local partnership has assets of cash of $130,000 and
land recorded at $700,000. All liabilities have been paid and
the partners are all personally insolvent. The partners' capital
accounts are as follows Roberts, $500,000, Ferry, $300,000
and Mones, $30,000. The partners share profits and losses
5:3:2.
If the land is sold for $450,000, how much cash will Roberts
receive in the final settlement?
A. $0.
B. $30,000.
C. $217,500.
D. $362,500.
E. $502,500.
35. A local partnership has assets of cash of $130,000 and
land recorded at $700,000. All liabilities have been paid and
the partners are all personally insolvent. The partners' capital
accounts are as follows Roberts, $500,000, Ferry, $300,000
and Mones, $30,000. The partners share profits and losses
5:3:2.
If the land is sold for $450,000, how much cash will Mones
receive in the final settlement?
A. $0.
B. $15,000.
C. $300,000.
D. $217,500.
E. $362,500.