Question
In the JK partnership, Jacob's capital is $140,000, and Katy's is $40,000. They share income in a 3:2 ratio, respectively. They decide to admit Erin
In the JK partnership, Jacob's capital is $140,000, and Katy's is $40,000. They share income in a 3:2 ratio, respectively. They decide to admit Erin to the partnership. Each of the following questions is independent of the others.
Refer to the information provided above. What amount will Erin have to invest to give her a one-fourth interest in the capital of the partnership if no goodwill or bonus is recorded?
$50,000
$60,000
$45,000
$66,000
8.
Required information
Refer to the information provided above. Assume that Erin invests $40,000 for a one-fifth interest. Goodwill is to be recorded. The journal entry to record Erin's admission into the partnership will include:
a credit to Erin, Capital for $45,000
a credit to Erin, Capital for $40,000
a credit to cash for $40,000
a debit to goodwill for $4,000
9.
Required information
Refer to the information provided above. Jacob and Katy agree that some of the inventory is obsolete. The inventory account is decreased before Erin is admitted. Erin invests $38,000 for a one-fifth interest. What is the amount of inventory written down?
$10,000
$36,000
$28,000
$20,000
10.
Required information
Refer to the information provided above. Jacob and Katy agree that some of the inventory is obsolete. The inventory account is decreased before Erin is admitted. Erin invests $38,000 for a one-fifth interest. What are the capital balances of Jacob and Katy after Erin is admitted into the partnership?
| Jacob | Katy | |
| A. | $140,000 | $40,000 |
| B. | $134,000 | $36,000 |
| C. | $123,200 | $28,800 |
| D. | $118,400 | $25,600 |
Option B
Option D
Option A
Option C
11.
Required information
Refer to the information provided above. Erin directly purchases a one-fifth interest by paying Jacob $33,000 and Katy $9,000. The land account is increased for its implied increase in value before Erin is admitted. By what amount is the land account increased?
$24,000
$36,000
$20,000
$30,000
12.
Required information
Refer to the information provided above. Erin directly purchased a one-fifth interest by paying Jacob $33,000 and Katy $9,000. The land account is increased for its implied increase in value before Erin is admitted. What are the capital balances of Jacob and Katy after Erin is admitted into the partnership?
| Jacob | Katy | |
| A. | $140,000 | $40,000 |
| B. | $152,000 | $48,000 |
| C. | $155,000 | $55,000 |
| D. | $158,000 | $52,000 |
Option A
Option C
Option B
Option D
13.
Required information
Refer to the information provided above. Erin invests $50,000 for a one-fifth interest in the total capital of $230,000. The journal entry to record Erin's admission into the partnership would include
a credit to Katy, Capital for $1,600.
a credit to Erin, Capital for $50,000.
a debit to Jacob, Capital for $2,400.
a credit to Cash for $50,000.
14.
Required information
Refer to the information provide above. Erin invests $50,000 for a one-fifth interest in the total capital of $230,000. What are the capital balances of Jacob and Katy after Erin is admitted into the partnership?
| Jacob | Katy | |
| A. | $142,400 | $41,600 |
| B. | $142,000 | $42,000 |
| C. | $140,000 | $40,000 |
| D. | $137,600 | $38,400 |
Option D
Option B
Option C
Option A
15.
Required information
Refer to the information provided above. Erin invests $52,000 for a one-fifth interest. What amount of goodwill will be recorded?
$28,000
$7,000
$50,000
$80,000
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Advanced Financial Accounting
Authors: Theodore E. Christensen, David M. Cottrell, Richard E. Baker
10th edition
78025621, 978-0078025624
