Select the best answer for each of the following.? 1. Jon and Joe formed a partnership on
Question:
Select the best answer for each of the following.?
1. Jon and Joe formed a partnership on July 1, 2019, and invested the following assets:
The realty was subject to a mortgage of $25,000, which was assumed by the partnership. The partnership agreement provides that Jon and Joe will share profits and losses in the ratio of one-third and two-thirds, respectively. Joe?s capital account at July 1, 2019, should be?
(a) $375,000
(b) $366,667
(c) $285,000
(d) $350,000
2. On July 1, 2019, Mary and Jane formed a partnership, agreeing to share profits and losses in the ratio of 4:6, respectively. Mary invested a parcel of land that cost her $40,000. Jane invested $50,000 cash. The land was sold for $60,000 on July 1, 2019, four hours after formation of the partnership. How much should be recorded in Mary?s capital account on formation of the partnership?
(a) $8,000
(b) $24,000
(c) $60,000
(d) $20,000
3. Tom and Jim are partners who share profits and losses in the ratio of 3:2, respectively. On August 31, 2019, their capital accounts were as follows:
Tom .......................... ? ?$ 80,000Jim ............................ ? ? ? ?50,000? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?$130,000
On that date they agreed to admit John as a partner with a one-third interest in the capital and profits and losses, for an investment of $50,000. The new partnership will begin with a total capital of $180,000. Immediately after John?s admission, what are the capital balances of the partners?
4. On June 30, 2019, the balance sheet for the partnership of Al, Carl, and Paul, together with their respective profit and loss ratios, were as follows:
Assets, at Cost ................................ ? ?$180,000Al, Loan ............................................ ? $ ? ? 9,000Al, Capital (20%) .............................. ? ? ? ?42,000Carl, Capital (20%) .......................... ? ? ? ?39,000Paul, Capital (60%) .......................... ? ? ? 90,000Total .................................................. ?$180,000
Al has decided to retire from the partnership. By mutual agreement, the assets are to be adjusted to their fair value of $220,000 at June 30, 2019. It was agreed that the partnership would pay Al $61,200 cash for Al?s partnership interest, including Al?s loan, which is to be repaid in full. No goodwill is to be recorded. After Al?s retirement, what is the balance of Carl?s capital account?(a) $36,450.(b) $39,000.(c) $46,450.(d) $47,000.(AICPA adapted)
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