M5

1

Partners Roger and Martin each have $3,000 capital balances and share income and losses in a 2:1 ratio for Roger and Martin, respectively. Cash equals $1,000, noncash assets total $10,000, and liabilities are $5,000. If all the noncash assets are sold for $4,000, Martin's capital account will:

		increase by $4,667.
		decrease by $2,000.
		decrease by $1,000.
		increase by $2,333.

5

The sale of assets for liquidation purposes of a partnership is called:

		a sheriff's sale.
		dissolution.
		net liquidation.
		None of the above

6

When a partnership is liquidated, the journal entry to pay the claims of creditors would include:

		a debit to Cash.
		a debit to each individual creditor.
		a credit to cash.
		Both B and C

7

Which of the following is an incorrect step in the process of partnership liquidation?

		Pay any liabilities
		Sell the assets
		Allocate gains and losses to partners
		None of the above

10

A partnership can be terminated by which of the following?

		Bankruptcy
		Death of a partner
		Agreement by partners
		All of the above