1) A partnership recorded the following journal entry: Cash...70,000 B.Tanner, C
ID: 2441746 • Letter: 1
Question
1) A partnership recorded the following journal entry:Cash...70,000
B.Tanner, Capital...10,000
R.Jackson, Capital...10,000
H.Rivera, Capital...90,000
This entry reflects:
a. Acceptance of a new partner who invests $70,000 and receives a 20,000 bonus.
b. Withdraw of a parner who pays a $10,000 bonus to each of the other partners.
c. Addition of a partner who pays a bonus to each of the other partners.
d. Additional investment into the partnership by Tanner and Jackson.
E. Withdrawl of $10,000 each by Tanner and Jackson upon the admission of a new partner.
2) Groh and Jackson are parnters. Groh's capital balance in the partnership is $64,000, and Jackson's capital balance $61,000. Groh and Jackson have agreed to share equally in income or loss. Groh and Jackson agree to accept Block with a 20% interest. Block will invest $35,000 in the partnership. The bonus that is granted to Groh and Jackson equals:
a. $1,500 each
b. $1,875 each
c. $3,750 each
d. 1,920 to Groh; $1,830 to Jackson.
e. $0, because Groh and Jackson actually grant a bonus to Block.
3) Groh and Jackson are partners. Groh's capital balance in the partnership is $64,000, and Jackson's capital balance $61,000. Groh and Jackson have agreed to share equally in income or loss. Groh and Jackson agree to accept Block with a 25% interest. Block will invest $35,000 in the partnership. The bonus that is granted to Block equals:
a.$5,000
b.$2,500
c.$6,667
d.$3,333
e.$0, because Block must actually grant a bonus to Groh and Jackson.
4) McCarthy, Harris, and Hussin are dissolving their partnerhsip. Their partnership agreement allocates income and losses equally among the partners. The current period's ending capital account balances are McCarthy, $15,000, Harris, $15,000, Hussin, $(2,000). After all the assets are sold and liabilities are paid, but before any contributions to cover any deficiencies, there is $28,000 in cash to be distributed. Hussin pays $2,000 to cover the deficiency in his account. The general journal entry to record the final distribtion would be:
a. McCarthy, Capital...15,000
Harris, Capital...15,000
Cash...30,000
b. McCarthy, Capital...14,000
Harris, Capital...14,000
Cash...28,000
c. McCarthy, Capital...15,000
Harris, Capital...15,000
Hussin, Capital...2,000
Cash...28,000
d. Cash...28,000
Hussin, Capital...2,000
McCarthy...Capital...15,000
Harris, Capital...15,000
e. McCarthy, Capital...9,334
Harris, capital...9,333
Hussin, Capital...9,333
Cash...28,000
5)McCarthy, Harris and Hussin are dissolving their partnership. Their partnership agreement allocates each partner 1/3 of all income and losses. The current period's ending capital account balances are McCarthy, $13,000; Harris, $13,000; and Hussin, $(2,000). After all assets are sold and liabilities are paid, there is $24,000 in cash to be distributed. Hussin is unable to pay the deficiency. The journal entry to record the distribution should be:
a. McCarthy, Capital...8,000
Harris, Capital...8,000
Hussin, Capital...8,000
Cash...24,000
b. McCarthy, Capital...12,000
Harris, Capital...12,000
Cash...24,000
c. McCarthy, Capital...13,000
Harris, Capital...13,000
Hussin, Capital...2,000
Cash...24,000
d. Cash...24,000
Hussin, Capital...2,000
McCarthy, Capital...13,000
Harris, Capital...13,000
e. cash...24,000
McCarthy, Capital...8,000
Harris, Capital...8,000
Hussin, Capital...8,000
Explanation / Answer
1. c. Addition of a partner who pays a bonus to each of the other partners.
2. a. $1,500 each
Total partnership equity = $64,000 + $61,000 + $35,000 = $160,000
Equity of Block = $160,000 x 0.20 = $32,000
Bonus to old partners = $35,000 - $32,000 = $3,000, split equally
_________________________________________________________
3. a.$5,000
Total partnership equity = $64,000 + $61,000 + $35,000 = $160,000
Equity of Block = $160,000 x 0.25 = $40,000
Bonus to Block = $40,000 - $35,000 = $5,000
___________________________________________
4. a.
McCarthy, Capital 15,000
Harris, Capital 15,000
Cash 30,000
____________________________________________
5. b.
McCarthy, Capital 12,000
Harris, Capital 12,000
Cash 24,000
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