Kathy Lentz, Rob Snyder, and Tom Rohm were all general partners in a consulting
ID: 444089 • Letter: K
Question
Kathy Lentz, Rob Snyder, and Tom Rohm were all general partners in a consulting business. Each partner owned one-third of the business. The partnership agreement stated that all three partners must approve vouchers for payments in amounts exceeding $5,000. While Tom was on vacation Kathy and Rob decided to purchase a new computer system costing $6,800. A voucher was prepared and Rob signed both his and Tom’s names. Kathy signed her name and gave the voucher to the accounts payable clerk who wrote the check for $6,800. 1. Why would a partnership agreement specify that all purchases over a certain amount be approved by all partners? Are there any circumstances that would warrant a deviation from this policy? 2. What are some of the possible outcomes of this situation? 3. What is the accounts payable clerk’s responsibility in this situation?
Explanation / Answer
1. it is the general concept in partnership firms, where the transactions are material and important in nature then it requires all the partners signatures. suppose, if any one of the partner is not available, then if the majority of the existed accepted witht the decision it can be implement.
2. if everything go in a correct way, then there is no problem. but if anything goes wrong, then problems will rises among the partners.
3. the accounts clerks should not do anything but accepting the payment. he is an employee and he is there to implement the orders of the owners.
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