Fundamental Accounting practice questions

Maxwell and Smart are forming a partnership. Maxwell is investing a building that has a market value of $92,000. However, the building carries a $44,000 mortgage that will be assumed by the partnership. Smart is investing $45,000 cash. The balance of Maxwell's Capital account will be:

$93,000.

$92,000.

$47,000.

$44,000.

$48,000

Peters, Chong, and Aaron are dissolving their partnership. Their partnership agreement allocates each partner an equal share of all income and losses. The current period's ending capital account balances are Peters, $84,000; Chong, $72,000; and Aaron, $(21,000). After all assets are sold and liabilities are paid, there is $135,000 in cash to be distributed. Aaron is unable to pay the deficiency. The journal entry to record the distribution should be:

Debit Cash $135,000, debit Aaron, Capital $21,000, credit Peters, Capital $84,000, credit Chong, Capital $72,000.

Debit Cash $135,000; credit Peters, Capital $45,000; credit Chong, Capital $45,000.

Debit Peters, Capital $84,000; debit Chong, Capital $51,000; credit Cash $135,000.

Debit Peters, Capital $84,000; debit Chong, Capital $72,000; credit Cash $156,000.

Debit Peters, Capital $73,500; debit Chong, Capital $61,500; credit Cash $135,000.

3. Wallace and Simpson formed a partnership with Wallace contributing $92,000 and Simpson contributing $72,000. Their partnership agreement calls for the income (loss) division to be based on the ratio of capital investments. The partnership had income of $205,000 for its first year of operation. When the Income Summary is closed, the journal entry to allocate partner income is:

Debit Income Summary $205,000; credit Wallace, Capital $102,500; credit Simpson, Capital $102,500.

Debit Wallace, Capital $102,500; debit Simpson, Capital $102,500; credit Income Summary $205,000.

Debit Income Summary $205,000; credit Wallace, Capital $115,000; credit Simpson, Capital $90,000.

Debit Cash $205,000; credit Wallace, Capital $115,000; credit Simpson, Capital $90,000.

Debit Wallace, Capital $115,000; debit Simpson, Capital $92,000; credit Cash $205,000.

Peters and Chong are partners and share equally in income or loss. Peters' current capital balance is $310,000 and Chong's is $300,000. Peters and Chong agree to accept Aaron with a 30% interest in the partnership. Aaron invests $278,000 in the partnership. The amount credited to Aaron's capital account is:

$176,400.

$588,000.

$288,000.

$266,400.

$278,000.

5. Bloom and Plant organize a partnership on January 1. Bloom's initial investment consists of $350 cash, $1,400 equipment and a $700 note payable reflecting a bank loan for the new business. Plant's initial investment is cash of $1,050. These amounts are the values agreed on by both partners. The journal entry to record Bloom's investment is:

Debit Cash $350; debit Equipment $1,400; credit Note Payable $700; credit Bloom, Capital $1,050.

Debit Cash $1,050; credit Bloom, Capital $1,050.

Debit Cash $350; debit Equipment $1,400; credit Bloom, Capital $2,300.

Debit Cash $350; debit Equipment $700; credit Bloom, Capital $1,050.

Debit Bloom, Capital $2,450; credit Common Stock $2,450.

Fontaine and Monroe are forming a partnership. Fontaine invests a building that has a market value of $336,000; the partnership assumes responsibility for a $118,000 note secured by a mortgage on the property. Monroe invests $93,000 in cash and equipment that has a market value of $68,000. For the partnership, the amounts recorded for the building and for Fontaine's Capital account are:

Building $218,000; Fontaine, Capital $218,000.

Building $218,000; Fontaine, Capital $118,000.

Building $336,000; Fontaine, Capital $218,000.

Building $336,000; Fontaine, Capital $336,000.

Building $336,000; Fontaine, Capital $279,000.

Wheadon, Davis, and Singer formed a partnership with Wheadon contributing $66,000, Davis contributing $55,000 and Singer contributing $44,000. Their partnership agreement called for the income (loss) division to be based on the ratio of capital investments. If the partnership had income of $90,000 for its first year of operation, what amount of income (rounded to the nearest thousand) would be credited to Singer's capital account?

$24,000.

$90,000.

$30,000.

$36,000.

$44,000.

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Mace and Bowen are partners and share equally in income or loss. Mace's current capital balance is $138,000 and Bowen's is $122,500. Mace and Bowen agree to accept Kent with a 30% interest in the partnership. Kent invests $118,000 in the partnership. The balances in Mace's and Bowen's capital accounts after admission of the new partner equal:

Mace $142,450; Bowen $122,500.

Mace $138,000; Bowen $126,950.

Mace $135,775; Bowen $120,275.

Mace $140,225; Bowen $124,725.

Mace $138,000; Bowen $122,500.

Design Services is organized as a limited partnership, with Miko Toori as one of its partners. Miko's capital account began the year with a balance of $46,200. During the year, Miko's share of the partnership income was $8,700, and Miko received $5,200 in distributions from the partnership. What is Miko's partner return on equity?

18.1%

11.3%

10.8%

17.5%

18.8%

10. Wallace and Simpson formed a partnership with Wallace contributing $86,000 and Simpson contributing $66,000. Their partnership agreement calls for the income (loss) division to be based on the ratio of capital investments. Wallace sold one-half of his partnership interest to Prince for $73,000 when his capital balance was $96,000. The partnership would record the admission of Prince into the partnership as:

Debit Wallace, Capital $73,000; credit Prince, Capital $73,000.

Debit Wallace, Capital $48,000; credit Prince, Capital $48,000.

Debit Prince, Capital $73,000; credit Wallace, Capital $73,000.

Debit Wallace, Capital $43,000; credit Prince, Capital $43,000.

Debit Wallace, Capital $48,000; debit Cash $25,000; credit Prince, Capital $73,000.

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