1. Which of the following BEST describes the partnership term 'Interest on Capital'?

The following refers to item 2.

Jack and John started their partnership in 2014. They agreed to contribute an equal amount of capital and to share profits and losses equally. The total capital will be $900 000 and they will invest any differences in cash. The partners agree to contribute the assets as shown in the following table.

2. The total cash contribution required is

3. Joey, one of the partners of ParaLegal, has capital of $100 000. Joey decides to sell her share in the partnership to Jilly for $120 000 cash. The other partners at ParaLegal have agreed to admit Jilly in the partnership. Which of the following is the correct journal entry to record Jilly's purchase of interest in the company?

The procedural steps for recording goodwill created are

I Make journal entry to admit new partner.
II Calculate partnership goodwill.
III Make journal entry for goodwill created.

The following information refers to items 5-6.

Gabby and Naomi are in partnership with $150 000 capital each, sharing profits and losses equally. On 31 December, they agree to admit Cian for 1/5 interest in the partnership upon investment of $100 000.

5. The amount of goodwill is

6. The journal entry to record Cian's investment is

7. Denis, Franklyn and Ian are in partnership. Ian decides to retire from the company. The steps to close the business accounts for the retirement are

I Check to see if the assets have changed in value.
II Make journal entries to revalue assets.
III Share the balance of the revaluation among existing partners.

The following information refers to items 8-10.

Board and Liner are partners of a partnership business, sharing profits and losses in the ratio 1:2 respectively. In January their capitals were Board $80 000 and Liner $75 000. During the year, they agree to admit Wood upon an investment of $300 000 for 1/5 interest in the business.

8. What is the total amount invested in the partnership to date?

9. Wood's 1/5 interest in the business is

10. The total bonus to be divided between Board and Liner is

11. Which of the following journal entries is used to close a retiring partnership capital account?

12. A business partnership mat dissolve for a variety of reasons, such as

I admission
II bankruptcy
III sale or conversion

13. Lynette and Jewel are in a partnership, sharing profits and losses in the ration 3:2 respectively. Lynette receives a salary of $6000 per annum. The net profit for the year is $26000. Lynette and Jewel's shares of profit are

14. A partnership may be terminated if

15. Lennox and Algene formed a partnership, contributing $100 000 and $50 000 respectively. They agree to 10% interest of each partner's capital balance at the beginning of the year, with sharing of income equally. The income for the first year is $50 000. The amount of income each partner will receive is

16. Dyann and Gaynelle operate a partnership business, sharing the earnings equally. Dyann has $48 000 invested in the business and Gaynelle has $42 000 as her investment. They agreed to allow Gay a one-fifth share of the investment of $50 000. Gay's equity is

17. Which of the following is an example of a non-judicial dissolution issue in a partnership?

18. Which of the following accounts is used as a temporary account for incorporation of a partnership business?

19. The steps for incorporation of a partnership business are

I adjust to fair market value
II accumulate gains/losses
III share the balance and transfer to capital accounts.

20. The steps of liquidation are

I pay partners
II sell assets
III pay liabilities

21. The steps for recording the creation of a partnership are as follows

I Add assets and liabilities of each partner
II Identify fair market value of assets of each partner
III Calculate and create capital accounts for each partner

22. Tiffany, Priya and Akousa formed a partnership. They agreed to share profits and losses equally. At the end of the second year, the business incurred a remaining loss of $39 000. The journal entry to record the loss shared among the partners is

23. Partners A and B have a profit and loss agreement with the following provisions.  Salaries of $30,000 for A and $ 45,000 for B; a bonus to A of 10% of net income after salaries; and interest of 10% cent on average capital balances of $50,00 and $60,000 for A and B, respectively. One quarter of any remaining profits is allocated to A and the balance to B. If the partnership had net income of $105,000, how much should be allocated to A?

24. The admission of a new partner under the bonus method will result in a bonus to:

25. When a new partner is admitted to a partnership under the goodwill method, an original partner’s capital account may be adjusted for:

26. If an existing partner withdraws from a partnership:

Use the following information to answer the next 2 questions

Will Smith, a new partner is admitted to the Labell and Ross Partnership under the bonus method. He contributes cash of $20,000 and equipment with a market value of $30,000 in exchange for a 20% ownership interest in the new partnership. The capital of the existing partnership is $130,000. Labell and Ross share profits and losses at a ratio of 80:20, respectively.

27. What is Will Smith’s capital balance?

28. Which of the following bonus amounts would be recorded?

29. The liquidation proceeds for a partnership will be distributed in which of the following priority sequences?

30. A partnership has assets with a book value of $480,000 and a market value of $390,000, outside liabilities of $140 000, loans payable to partner Ocie of $40,000 and capital balances for partners Ocie, Baker and Cynthia $140,000, $60,000 and $100, 000 respectively. How much would Ocie receive upon liquidation of the partnership assuming profits and losses are allocated equally?

Use the following information to answer the next (2) questions:

ABC partnership has assets with a book value of $240,000 and a market value of $195,000, liabilities total $90,000 and capital balances for partners A, B and C are $67,500, $32,500 and $50,000, respectively.  The partners decide to incorporate the partnership. The new company ABC Inc. will issue 30,000 $2 par value shares to the partners.

31.  What will Partner A receive?

32. What will Partner B receive?