Question

The Calvin-Dogwood Partnership owns inventory that was purchased for $65,800, has a current replacement cost of $58,900, and is priced to sell for $93,600. At what amount should the inventory be recorded in the accounts of the new partnership if Alexis is to be admitted?

a.$65,800

b.$34,700

c.$58,900

d.$93,600

2)

The balance sheet of Morgan and Rockwell was as follows immediately prior to the partnership's liquidation: cash, $22,300; other assets, $144,000; liabilities, $41,100; Morgan, capital, $60,100; Rockwell, capital, $65,100. The other assets were sold for $124,200. Morgan and Rockwell share profits and losses in a 2:1 ratio. As a final cash distribution from the liquidation, Morgan will receive cash totaling

a.$14,867

b.$22,300

c.$46,900

d.$60,100

3)

Franco and Jason share income and losses in a 2:1 ratio after allowing for salaries of $18,300 and $34,200, respectively. If the partnership suffers a $16,500 loss, by how much would Jason's capital account increase?

a.$11,200

b.$34,200

c.$22,600

d.$28,700

4)

Hannah Johnson contributed equipment, inventory, and $46,700 cash to a partnership. The equipment had a book value of $28,200 and a market value of $33,900. The inventory had a book value of $47,500 but only had a market value of $18,400 due to obsolescence. The partnership also assumed a $14,300 note payable owed by Hannah that was originally used to purchase the equipment.

What amount should be recorded to Hannah's capital account?

a.$108,100

b.$128,100

c.$84,700

d.$113,300

5)

Xavier and Yolanda have original investments of $47,500 and $104,400, respectively, in a partnership. The articles of partnership include the following provisions regarding the division of net income: interest on original investment at 20%; salary allowances of $27,800 and $29,900, respectively; and the remainder to be divided equally. How much of the net income of $107,300 is allocated to Xavier?

a.$56,292

b.$27,800

c.$37,300

d.$46,910

6)

Jesse and Tim form a partnership by combining the assets of their separate businesses. Jesse contributes accounts receivable with a face amount of $49,000 and equipment with a cost of $180,000 and accumulated depreciation of $100,000. The partners agree that the equipment is to be valued at $68,500, that $3,700 of the accounts receivable are completely worthless and are not to be accepted by the partnership, and that $2,100 is a reasonable allowance for the uncollectibility of the remaining accounts receivable. Tim contributes cash of $20,000 and merchandise inventory of $45,000. The partners agree that the merchandise inventory is to be valued at $48,500.

Journalize the entries to record in the partnership accounts (a) Jesse's investment and (b) Tim's investment. If an amount box does not require an entry, leave it blank.

(a)
(b)

Answer 1

Solution 1:

At the time of admission of new partner, all assets and liabilities of the company are revalued so that new partner should not be benefit for any appreciation in assets and new partners should not suffer any loss due to decrease in value of assets.

In the current case inventory was purchased by partnership for $65,800 and currently available in market at a cost of $58,900 result in decrease in value of inventory

Therefore in new partnership inventory will be recorded at its replacment cost i.e. $58,900.