Answer all circled questions. Also Show works for multiple choices that requires computation

1. What are the advantages of operating a business as a partnership rather than as a corporation? What are the disadvantages? 2. How does partnership accounting differ from corporate accounting? 3. What information do the capital accounts found in partnership accounting convey? 4. Describe the differences between a Subchapter S corporation and a Subchapter C corporation. 5. A company is being created and the owners are trying to decide whether to form a general partner- ship, a limited liability partnership, or a limited liability company. What are the advantages and disadvantages of each of these legal forms? 6. What is an articles of partnership agreement, and what information should this document contain? 7. What valuation should be recorded for noncash assets transferred to a partnership by one of the partners? 8. If a partner is contributing attributes to a partnership such as an established clientele or a particular expertise, what two methods can be used to record the contribution? Describe each method. 9. What is the purpose of a drawing account in a partnerships financial records? 10. At what point in the accounting process does the allocation of partnership income become significant? 11. What provisions in a partnership agreement can be used to establish an equitable allocation of income among all partners? 12. If no agreement exists in a partnership as to the allocation of income, what method is appropriate? 13. What is a partnership dissolution? Does dissolution automatically necessitate the cessation of busi- ness and the liquidation of partnership assets? 14. By what methods can a new partner gain admittance into a partnership? 15. When a partner sells an ownership interest in a partnership, what rights are conveyed to the new owner? | 16. A new partner enters a partnership and goodwill is calculated and credited to the original partners. How is the specific amount of goodwill assigned to these partners? 17. Under what circumstance might goodwill be allocated to a new partner entering a partnership? 18. When a partner withdraws from a partnership, why is the final distribution often based on the appraised value of the business rather than on the book value of the capital account balance? 6. A partnership has the following capital balances: Comprix (35% of gains and losses) ....... $150,000 Heflin (40%) ... ................. 300,000 Kaplan (25%) .......... 320,000 Mahar is going to pay a total of $200,000 directly to these three partners to acquire a 25 percent ownership interest from each. Goodwill is to be recorded. What is Heflin's capital balance after the transaction? a. $225,000 b. $234,000 C. $312,000 | \ d. $360,000 7.) The capital balance for Maxwell is $110,000 and for Russell is $40,000. These two partners share profits and losses 70 percent (Maxwell) and 30 percent (Russell). Evan invests $50,000 in cash into the partnership for a 30 percent ownership. The bonus method will be used. What is Russell's capital balance after Evan's investment? a. $35,000 b. $37,000 C. $40,000 d. $43,000 10. A partnership begins its first year with the following capital balances: Alfred, Capital .......... $ 50,000 Bernard, Capital. .......................... 60,000 Collins, Capital........................... 70,000 The articles of partnership stipulate that profits and losses be assigned in the following manner: Each partner is allocated interest equal to 5 percent of the beginning capital balance. Bernard is allocated compensation of $18,000 per year. Any remaining profits and losses are allocated on a 3:3:4 basis, respectively. Each partner is allowed to withdraw up to $5,000 cash per year. Assuming that the net income is $60,000 and that each partner withdraws the maximum amount allowed, what is the balance in Collins capital account at the end of that year? a. $70,800 b. $86,700 c. $73,500 d. $81,700 11. A partnership begins its first year of operations with the following capital balances: Winston, Capital. ......... $110,000 Durham, Capital..... 80,000 Salem, Capital .. 110,000 According to the articles of partnership, all profits will be assigned as follows: Winston will be awarded an annual salary of S20,000 with $10,000 assigned to Salem. The partners will be attributed interest equal to 10 percent of the capital balance as of the first day of the year. The remainder will be assigned on a 5:2:3 basis, respectively. Each partner is allowed to withdraw up to $10,000 per year. The net loss for the first year of operations is $20,000 and net income for the subsequent year is $40,000. Each partner withdraws the maximum amount from the business each period. What is the balance in Winston's capital account at the end of the second year? a. $102,600 b. $104.400 c. $108,600 d. $109,200 12. A partnership has the following capital balances: Allen, Capital ... $60,000 Burns, Capital. . 30,000 Costello, Capital ..... 90,000 Profits and losses are split as follows: Allen (20 percent), Burns (30 percent), and Costello (50 percent). Costello wants to leave the partnership and is paid $100,000 from the business based on provisions in the articles of partnership. If the partnership uses the bonus method, what is the balance of Burns's capital account after Costello withdraws? a. $24,000 b. $27,000 c. $33,000 d. $36,000 The payment made to Clark beyond his capital account was for Clark's share of previously unrec- ognized goodwill. After recognizing partnership goodwill, what is Manning's capital balance after Clark withdraws? a. $133,000 b. $137,500 c. $140,000 d. $145,000 If instead the partnership uses the bonus method, what is the balance of Manning's capital account after Clark withdraws? a. $100,000 b. $126,250 c. $130,000 d. $133,750 Problems 15 and 16 are independent problems based on the following capital account balances: William (40% of gains and losses) ..... Jennings (40%) .... Bryan (20%)... $ 220,000 160,000 110,000 15. Darrow invests $270,000 in cash for a 30 percent ownership interest. The money goes to the origi- nal partners. Goodwill is to be recorded. How much goodwill should be recognized, and what is Darrow's beginning capital balance? a. $410,000 and $270,000 b. $140,000 and $270,000 c. $140,000 and $189,000 d. $410,000 and $189,000 16. Darrow invests $250,000 in cash for a 30 percent ownership interest. The money goes to the busi- ness. No goodwill or other revaluation is to be recorded. After the transaction, what is Jennings's capital balance? a. $160,000 b. $168,000 c. $170,200 d. $171,200 17. Lear is to become a partner in the WS partnership by paying $80,000 in cash to the business. At present, the capital balance for Hamlet is $70,000 and for MacBeth is $40,000. Hamlet and Mac- Beth share profits on a 7:3 basis. Lear is acquiring 40 percent of the new partnership. a. If the goodwill method is applied, what will the three capital balances be following the payment by Lear? b. If the bonus method is applied, what will the three capital balances be following the payment by Lear