In liquidation, balances prior to the distribution of cash to the partners are: Cash $600,000;

Presley, Capital $280,000; Laswell, Capital $260,000, and Hunter, Capital $60,000.

The income ratio is 6:2:2, respectively.

If all of the partners have capital credit balances, how much cash should be distributed to Presley?

a.$280,000

b.$250,000

c.$272,500

d.$300,000

In the liquidation of a partnership, any gain or loss realized on the sale of noncash assets should be allocated

a.to the partners on the basis of their capital balances.

b.first to creditors and the remainder to partners.

c.only after all creditors have been paid.

d.to the partners on the basis of their income ratios.

The following amounts were taken from the financial statements of Leaf Company:

2017

Total assets$800,000

Net sales720,000

Gross profit352,000

Net income150,000

Weighted average common shares outstanding50,000

Market price of common stock$64.50

The price-earnings ratio for2017is:

a.4.5 times.

b.36 times.

c.3.0 times.

d.21.5 times.

A mortgage note payable with a fixed interest rate requires the borrower to make installment payments over the term of the loan.Each installment payment includes interest on the unpaid balance of the loan and a payment on the principal.With each installment payment,indicate the effect on the portion allocated to interest expense and the portion allocated to principal.

a.Portion AllocatedPortion Allocated

to Interest Expenseto Payment of Principal

IncreasesIncreases

b.Portion AllocatedPortion Allocated

to Interest Expenseto Payment of Principal

IncreasesDecreases

c.Portion AllocatedPortion Allocated

to Interest Expenseto Payment of Principal

DecreasesDecreases

d.Portion AllocatedPortion Allocated

to Interest Expenseto Payment of Principal

DecreasesIncreases

If common stock is issued in exchange for land, it would be reported:

a.as an operating activity.

b.as a noncash activity at the bottom of the statement of cash flows.

c.as a financing activity.

d.as an investing activity.

Palmyra Company reported the following on its income statement:

Income before interest expense and income taxes$660,000

Interest expense60,000

Income before income taxes$600,000

Income tax expense150,000

Net income$450,000

Palmyra Company's times interest earned was:

a.10times.

b.7.5times.

c.11times.

d.8.5times.

Hansel and Gretel decide to organize a partnership. Hansel invests $15,000 cash, and Gretel contributes

$12,000 cash and equipment having a book value of $6,000 and a fair value of $9,000.

Choose the entry to record Gretel's investment in the partnership.

a.Cash.......................................................................................12,000

Gretel,Capital.................................................12,000

b.Equipment............................................................................6,000

Gretel,Capital..............................................6,000

c.Cash.......................................................................................12,000

Equipment....................................................................6,000

Gretel,Capital...............................................18,000

d.Cash.......................................................................................12,000

Equipment......................................................................9,000

Gretel,Capital...................................................21,000

If a corporation declares a10%stock dividend on its common stock,the account to be debited on the date of declaration is:

a.Common Stock

b.Paid-in Capital in Excess of Par

c.Stock Dividends

d.Common Stock Dividends Distributable

The net income for the year ended was$300,000.Common stockholders' equity at the beginning of the year was$1,400,000and$1,600,000at the end of the year.The return on common stockholders' equity would be:

a.87.50%

b.21.43%

c.20.00%

d.18.75%

Bond interestpaidsemiannually is:

a.lower when bonds sell at a premium.

b.higher when bonds sell at a discount.

c.higher when bonds sell at a discount and lower when bonds sell at a premium.

d.the same whether bonds sell at a discount or a premium.

Barton Company is a publicly held corporation whose$1par value stock is actively traded at$32per share.

The company issued3,000shares of stock to acquire land recently advertised at$100,000.

When recording this transaction,Barton Company will:

a.credit Common Stock for$96,000.

b.debit Land for$100,000.

c.credit Paid-In Capital in Excess of Par for$98,000.

d.debit Land for$96,000.

The following amounts were taken from the financial statements of Leaf Company:

20162015

Total assets$900,000$1,000,000

Net sales840,000650,000

Gross profit352,000320,000

Net income138,600117,000

Weighted average common shares outstanding90,00090,000

Market price of common stock$35$39

The profit margin ratio for2016is:

a.44.9%

b.10.7%

c.15.4%

d.16.5%

The liquidation of a partnership is a process containing the following steps:

1. Pay partnership liabilities in cash.
2. Allocate the gain or loss realized on the sale of non cash assets to the partners on the basis of their income ratios.
3. Sellnoncashassets for cash and recognize a gain or loss on realization.
4. Distribute remaining cash to partners on the basis of their remaining capital balances.

Identify the proper sequencing of the steps in the liquidation process.

a.3, 2, 1, 4.

b.1, 4, 3, 2.

c.1, 3, 2, 4.

d.3, 2, 4, 1.