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PARNERSHIP REVIEW

Multiple Choice
Identify the choice that best completes the statement or answers the question.
1. As part of the initial investment, a partner contributes equipment that had originally cost 100,000 and on which
accumulated depreciation of 75,000 has been recorded. If similar equipment would cost 150,000 to replace and
the partners agree on a valuation of 40,000 for the contributed equipment, what amount should be debited to the
equipment account?
a. 40,000
b. 150,000
c. 100,000
d. 75,000
2. As part of the initial investment, Oswald contributes accounts receivable that had a balance of 25,000 in the
accounts of a sole proprietorship. Of this amount, 1,250 is completely worthless. For the remaining accounts, the
partnership will establish a provision for possible future uncollectible accounts of 750. The amount debited to
Accounts Receivable for the new partnership is
a. 23,000
b. 25,000
c. 24,250
d. 23,750
3. Jack and Jill share income and losses in a 2:1 ratio after allowing for salaries to Jack of 24,000 and 30,000 to Jill.
Net income for the partnership is 48,000. Income should be divided as follows:
a. Jack, 24,000; Jill, 24,000
b. Jack, 21,000; Jill, 27,000
c. Jack, 32,000; Jill, 16,000
d. Jack, 20,000; Jill, 28,000
4. Fred and Ethel share income equally. During the current year the partnership net income was 40,000. Fred made
withdrawals of 12,000 and Ethel made withdrawals of 17,000. At the beginning of the year, the capital account
balances were: Fred capital, 42,000; Ethel capital, 58,000. Fred's capital account balance at the end of the year is
a. 76,500
b. 64,500
c. 62,000
d. 50,000
5. X and Y have original investments of 50,000 and 100,000 respectively in a partnership. The articles of partnership
include the following provisions regarding the division of net income: interest on original investment at 10%,
salary allowances of 27,000 and 18,000 respectively, and the remainder equally. How much of the net income of
90,000 is allocated to X?
a. 60,000
b. 43,000
c. 45,000
d. 47,000
6. X and Y have original investments of 50,000 and 100,000 respectively in a partnership. The articles of
partnership include the following provisions regarding the division of net income: interest on original investment at
10%, salary allowances of 27,000 and 18,000 respectively, and the remainder equally. How much of the net
income of 50,000 is allocated to X?
a. 33,333
b. 23,000
c. 25,000

d. 27,000
7. X and Y have original investments of 50,000 and 100,000 respectively in a partnership. The articles of
partnership include the following provisions regarding the division of net income: interest on original investment at
10%, salary allowances of 27,000 and 18,000 respectively, and the remainder equally. How much of the net loss
of 10,000 is allocated to X?
a. 10,000
b. 3,000
c. 5,000
d. 7,000
8. The articles of partnership for A B Partnership provide for a salary allowance of 5,000 per month for partner B,
with the balance of net income to be divided equally. If B made an additional investment of 10,000 during the
year and withdrew 4,000 per month, and net income for the year was 90,000, by what amount did B's capital
increase during the year?
a. 85,000
b. 10,000
c. 37,000
d. 60,000
9. Deng and Dang are partners who share income in the ratio of 3:2. Their capital balances are 40,000 and 60,000
respectively. Income Summary has a credit balance of 20,000. What is Deng's capital balance after closing
Income Summary to Capital?
a. 30,000
b. 52,000
c. 28,000
d. 32,000
Patti and Pam are forming a partnership. Patti will invest a piece of equipment with a book value of 4,000 and a
fair market value of 10,000. Pam will invest a building with a book value of 30,000 and a fair market value of
40,000.
10. At what amount will the building be recorded?
a. 15,000
b. 25,000
c. 30,000
d. 40,000
11. At what amount will Pattis capital account be recorded?
a. 10,000
b. 4,000
c. 14,000
d. 40,000
12. At what amount will Pams capital account be recorded?
a. 10,000
b. 4,000
c. 14,000
d. 40,000
13. Jan Barnes contributed equipment, inventory, and 42,000 cash to the partnership. The equipment had a book value
of 25,000 and market value of 28,000. The inventory has a book value of 50,000, but only had a market value of
15,000. due to obsolescence. The partnership also assumed a 12,000 note payable owed by Jan that was originally
used to purchase the equipment.
What amount should Jans capital account be recorded?

a. 85,000
b. 73,000
c. 117,000
d. 105,000
14. Tom Barnes contributed equipment, inventory, and 44,000 cash to the partnership. The equipment had a book
value of 35,000 and market value of 28,000. The inventory has a book value of 25,000, but only had a market
value of 12,000. due to obsolescence. The partnership also assumed a 15,000 note payable owed by Tom that was
originally used to purchase the equipment.

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What amount should Toms capital account be recorded?


a. 104,000
b. 89,000
c. 69,000
d. 84,000
Jack and Jill share income and losses in a 2:1 ratio after allowing for salaries to Jack of 24,000 and 30,000 to Jill.
Net income for the partnership is 66,000. Income should be divided as follows:
a. Jack, 24,000; Jill, 30,000
b. Jack, 24,000; Jill, 34,000
c. Jack, 30,000; Jill, 36,000
d. Jack, 32,000; Jill, 34,000
Fred and Ethel share income equally. During the current year the partnership net income was 40,000. Fred made
withdrawals of 12,000 and Ethel made withdrawals of 17,000. At the beginning of the year, the capital account
balances were: Fred capital, 42,000; Ethel capital, 58,000. Ethel's capital account balance at the end of the year is
a. 76,500
b. 61,000
c. 62,000
d. 50,000
X and Y have original investments of 50,000 and 100,000 respectively in a partnership. The articles of partnership
include the following provisions regarding the division of net income: interest on original investment at 10%,
salary allowances of 27,000 and 18,000 respectively, and the remainder equally. How much of the net income of
90,000 is allocated to Y?
a. 60,000
b. 43,000
c. 45,000
d. 47,000
X and Y have original investments of 50,000 and 100,000 respectively in a partnership. The articles of
partnership include the following provisions regarding the division of net income: interest on original investment at
10%, salary allowances of 27,000 and 18,000 respectively, and the remainder equally. How much of the net
income of 50,000 is allocated to Y?
a. 33,333
b. 23,000
c. 25,000
d. 27,000
X and Y have original investments of 50,000 and 100,000 respectively in a partnership. The articles of partnership
include the following provisions regarding the division of net income: interest on original investment at 10%,
salary allowances of 38,000 and 28,000 respectively, and the remainder equally. How much of the net income of
75,000 is allocated to Y?
a. 66,000
b. 40,000
c. 35,000

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d. 43,000
X and Y have original investments of 50,000 and 100,000 respectively in a partnership. The articles of partnership
include the following provisions regarding the division of net income: interest on original investment at 10%,
salary allowances of 38,000 and 28,000 respectively, and the remainder equally. How much of the net income of
75,000 is allocated to X?
a. 66,000
b. 40,000
c. 35,000
d. 43,000
X and Y have original investments of 50,000 and 100,000 respectively in a partnership. The articles of
partnership include the following provisions regarding the division of net income: interest on original investment at
10%, salary allowances of 27,000 and 18,000 respectively, and the remainder equally. How much of the net loss
of 10,000 is allocated to Y?
a. 10,000
b. 3,000
c. 5,000
d. 7,000
The articles of partnership for A B Partnership provide for a salary allowance of 5,000 per month for partner B,
with the balance of net income to be divided equally. If B made an additional investment of 10,000 during the
year and withdrew 4,000 per month, and net income for the year was 80,000, by what amount did B's capital
increase during the year?
a. 80,000
b. 12,000
c. 60,000
d. 32,000
Deng and Dang are partners who share income in the ratio of 3:1. Their capital balances are 40,000 and 60,000
respectively. Income Summary has a credit balance of 20,000. What is Deng's capital balance after closing
Income Summary to Capital?
a. 55,000
b. 75,000
c. 45,000
d. 65,000
Deng and Dang are partners who share income in the ratio of 3:1. Their capital balances are 40,000 and 60,000
respectively. Income Summary has a credit balance of 20,000. What is Dang's capital balance after closing
Income Summary to Capital?
a. 55,000
b. 75,000
c. 45,000
d. 65,000
Jack and Jill share income and losses in a 2:1 ratio after allowing for salaries to Jack of 15,000 and 30,000 to Jill.
If the partnership suffers a 15,000 loss, by how much would Jills capital account increase?
a. 10,000
b. 20,000
c. 40,000
d. 25,000
Stanley invests 10,000 for a 1/3 interest in a partnership in which the other partners have capital totaling 26,000
before admitting Stanley. After distribution of the bonus, what is Stanleys capital?
a. 12,000
b. 10,000

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c. 8,667
d. 5,333
Selma pays Sally 39,000 for her 30% interest in a partnership with total net assets of 120,000. Following this
transaction, Selma's capital account should have a credit balance of
a. 36,000
b. 39,000
c. 33,000
d. more than 39,000
Shaw and Hall are partners. The partnership capital for Shaw is 50,000 and for Hall is 60,000. Thomas is
admitted as a new partner by investing 40,000 cash. Thomas is given a 20% interest in return for her investment.
The amount of the bonus to the old partners is
a. 0
b. 18,000
c. 8,000
d. 10,000
A and B are partners who share income in the ratio of 2:1 and have capital balances of 50,000 and 30,000
respectively. With the consent of B, X buys one half of A's interest for 35,000. For what amount will A's capital
account be debited to record admission of X to the partnership?
a. 40,000
b. 15,000
c. 25,000
d. 35,000
The CD Partnership owns inventory that was purchased for 65,000, has a current replacement cost of 62,500, and
is priced to sell for 95,000. At what amount should the inventory be recorded in the accounts of the new
partnership if A is to be admitted?
a. 97,000
b. 62,500
c. 65,000
d. 95,000
Immediately prior to the admission of A, the XY Partnership assets had been adjusted to current market prices, and
the capital balances of X and Y were 40,000 and 60,000 respectively. If the parties agree that the business is
worth 150,000, what is the amount of bonus that should be recognized in the accounts at the admission of A?
a. 100,000
b. 0
c. 40,000
d. 50,000
Stan and Ollie are partners who share income in the ratio of 2:3 and have capital balances of 50,000 and 30,000
respectively. Ray is admitted to the partnership and is given a 40% interest by investing 20,000. What is Stan's
capital balance after admitting Ray?
a. 20,000
b. 25,000
c. 42,000
d. 18,000
Stan and Ollie are partners who share income in the ratio of 2:3 and have capital balances of 30,000 and 50,000
respectively. Ray is admitted to the partnership and is given a 10% interest by investing 20,000. What is Ollie's
capital balance after admitting Ray?
a. 56,000
b. 34,000
c. 20,000

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d. 44,000
Stan and Ollie are partners who share income in the ratio of 1:3 and have capital balances of 70,000 and 30,000
respectively. Ray is admitted to the partnership and is given a 40% interest by investing 20,000. What is Stan's
capital balance after admitting Ray?
a. 20,000
b. 7,000
c. 70,000
d. 63,000
Stan and Ollie are partners who share income in the ratio of 1:3 and have capital balances of 70,000 and 30,000
respectively. Ray is admitted to the partnership and is given a 40% interest by investing 20,000. What is Ollie's
capital balance after admitting Ray?
a. 20,000
b. 9,000
c. 70,000
d. 63,000
Sun and Moon are partners in a business. Suns original capital was 40,000 and Moons was 60,000. They agree
to salaries of 12,000 and 18,000 for Sun and Moon respectively and 10% interest on original capital. If they
agree to share remaining profits and losses on a 3:2 ratio, what will Suns share of the income be if the income for
the year was 50,000?
a. 24,000
b. 22,000
c. 16,000
d. 23,400
Sun and Moon are partners in a business. Suns original capital was 40,000 and Moons was 60,000. They agree
to salaries of 12,000 and 18,000 for Sun and Moon respectively and 10% interest on original capital. If they
agree to share remaining profits and losses on a 3:2 ratio, what will Moons share of the income be if the income
for the year was 30,000?
a. 20,000
b. 18,000
c. 18,600
d. 17,400
Sun and Moon are partners in a business. Suns original capital was 40,000 and Moons was 60,000. They agree
to salaries of 12,000 and 18,000 for Sun and Moon respectively and 10% interest on original capital. If they
agree to share remaining profits and losses on a 3:2 ratio, what will Suns share of the income(loss) be if the net
loss for the year was 10,000?
a. ( 12,600)
b. ( 14,000)
c. ( 6,000)
d. ( 10,000)
Sun and Moon are partners in a business. Suns original capital was 40,000 and Moons was 60,000. They agree
to salaries of 12,000 and 18,000 for Sun and Moon respectively and 10% interest on original capital. If they
agree to share remaining profits and losses on a 3:2 ratio, what will Suns share of the income be if the income for
the year was 15,000?
a. 9,000
b. 2,400
c. 1,000
d. 5,600

40. Sun and Moon are partners in a business. Suns original capital was 40,000 and Moons was 60,000. They agree
to salaries of 12,000 and 18,000 for Sun and Moon respectively and 10% interest on original capital. If they
agree to share remaining profits and losses on a 3:2 ratio, what will Moons share of the income be if the income
for the year was 15,000?
a. 6,000
b. 9,400
c. 12,600
d. 14,000
41. A and B are partners who share income in the ratio of 1:2 and have capital balances of 40,000 and 70,000 at the
time they decide to terminate the partnership. After all noncash assets are sold and all liabilities are paid, there is a
cash balance of 80,000. What amount of loss on realization should be allocated to A?
a. 80,000
b. 10,000
c. 20,000
d. 30,000
42. Tim, Don, and Hans are partners with capital balances of 20,000, 30,000, and 50,000 respectively. They share
income in the ratio of 3:2:1. Income Summary with a debit balance of 30,000 is closed to the capital accounts.
Don withdraws from the partnership. How much cash does he get upon withdrawal?
a. 30,000
b. 20,000
c. 40,000
d. 24,000
43. The balance sheet of Marilyn and Monroe was as follows immediately prior to the partnership's being liquidated:
cash, 20,000; other assets, 160,000; liabilities, 40,000; Marilyn capital, 60,000; Monroe capital, 80,000. The
other assets were sold for 139,000. Marilyn and Monroe share profits and losses in a 2:1 ratio. As a final cash
distribution from the liquidation, Marilyn will receive cash totaling
a. 46,000
b. 51,000
c. 60,000
d. 49,500
44. Jimmy, Jerry and Johnny decide to liquidate their partnership. All assets are sold and the liabilities are paid.
Following these transactions, the capital balances and profit and loss percentages are as follows: Jimmy, 27,000
and 30%; Jerry, (12,000) and 40%; Johnny, 43,000 and 30%. Jerry is unable to contribute any assets to reduce the
deficit. How much cash will Jimmy receive as a results of the partnership liquidation?
a. 27,000
b. 21,000
c. 23,400
d. 15,000
45. A and B are partners who share income in the ratio of 3:2 and have capital balances of 50,000 and 90,000 at the
time they decide to terminate the partnership. After all noncash assets are sold and all liabilities are paid, there is a
cash balance of 90,000. How much cash should be distributed to A?
a. 50,000
b. 20,000
c. 30,000
d. 45,000
46. X, Y, and Z are partners, sharing income 1:2:3. After selling all of the assets for cash, dividing losses on
realization, and paying liabilities, the balances in the capital accounts are as follows: X, 50,000 Cr.; Y, 40,000 Dr.;
and Z, 30,000 Cr. How much cash is available for distribution to the partners?
a. 120,000
b. 30,000

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c. 40,000
d. 90,000
X, Y, and Z are partners, sharing income 1:2:3. After selling all of the assets for cash, dividing losses on
realization, and paying liabilities, the balances in the capital accounts are as follows: X, 50,000 Cr.; Y, 40,000 Dr.;
and Z, 30,000 Cr. How much cash should be distributed to X assuming that Y pays the deficiency?
a. 50,000
b. 20,000
c. 30,000
d. 40,000
X, Y, and Z are partners, sharing income 1:2:3. After selling all of the assets for cash, dividing losses on
realization, and paying liabilities, the balances in the capital accounts are as follows: X, 50,000 Cr.; Y, 20,000 Cr.;
and Z, 30,000 Dr. Assume that after the available cash is distributed to the partners, Z pays 15,000 of the
deficiency to the firm. How much of the 15,000 should be distributed to X?
a. 15,000
b. 0
c. 5,000
d. 10,000
A and B are partners who share income in the ratio of 1:2 and have capital balances of 40,000 and 70,000 at the
time they decide to terminate the partnership. After all noncash assets are sold and all liabilities are paid, there is a
cash balance of 80,000. What amount of loss on realization should be allocated to B?
a. 80,000
b. 10,000
c. 20,000
d. 30,000
X and Y are partners who share income in the ratio of 1:3 and have capital balances of 50,000 and 70,000 at the
time they decide to terminate the partnership. After all noncash assets are sold and all liabilities are paid, there is a
cash balance of 70,000. What amount of loss on realization should be allocated to X?
a. 50,000
b. 12,500
c. 25,000
d. 37,500
X and Y are partners who share income in the ratio of 1:3 and have capital balances of 50,000 and 70,000 at the
time they decide to terminate the partnership. After all noncash assets are sold and all liabilities are paid, there is a
cash balance of 70,000. What amount of loss on realization should be allocated to Y?
a. 50,000
b. 12,500
c. 25,000
d. 37,500
Partners C and D each have a 40,000 capital balance and share income and losses in a 3:2. Cash equals 20,000,
noncash assets equal 120,000, and liabilities equal 60,000. If the noncash assets are sold for 70,000, the Cs
capital account will
a. decrease by 20,000.
b. decrease by 42,000.
c. increase by 42,000.
d. decrease by 30,000.
Partners C and D each have a 40,000 capital balance and share income and losses in a 3:2. Cash equals 20,000,
noncash assets equal 120,000, and liabilities equal 60,000. If the noncash assets are sold for 70,000, the Ds
capital account will
a. decrease by 20,000.

b. decrease by 42,000.
c. increase by 42,000.
d. decrease by 30,000.
54. Partners C and D each have a 40,000 capital balance and share income and losses in a 3:2. Cash equals 20,000,
noncash assets equal 120,000, and liabilities equal 60,000. If the noncash assets are sold for 50,000, and each
partner is personally insolvent, Partner C will eventually receive cash of
a. 0.
b. 10,000.
c. 12,000.
d. 20,000.
55. Partners C and D each have a 40,000 capital balance and share income and losses in a 3:2. Cash equals 20,000,
noncash assets equal 120,000, and liabilities equal 60,000. If the noncash assets are sold for 50,000, and each
partner is personally insolvent, Partner D will eventually receive cash of
a. 0.
b. 10,000.
c. 12,000.
d. 20,000.
56. Partners C and D each have a 40,000 capital balance and share income and losses in a 3:2. Cash equals 20,000,
noncash assets equal 120,000, and liabilities equal 60,000. If the noncash assets are sold for 45,000, and both
partners agree to make up an capital deficits with personal cash contributions, Partner D will eventually receive
cash of
a. 0.
b. 5,000.
c. 10,000.
d. 18,000.

PARNERSHIP REVIEW
Answer Section
MULTIPLE CHOICE
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
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27.
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35.
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41.

A
D
D
D
D
D
B
C
B
D
A
D
B
C
D
B
B
B
C
B
D
D
A
D
A
A
A
D
C
B
D
C
A
D
B
B
A
B
C
D
B

42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.

B
A
B
B
C
D
C
C
B
D
D
A
A
B
C

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