Question

35) When a new partner is admitted at a higher-than-book-value contribution, the existing partners will receive a bonus amount. A. True; ____or B.False ____

36) Keith and Jim are partners. Keith has a capital balance of $47,000 and Jim has a capital balance of $32,000. Jim sells $15,000 of his ownership to Bill. Which of the following is TRUE of the journal entry to admit Bill?

A) Bill, Capital will be debited for $17,000.

B) Jim, Capital will be debited for $17,000.

C) Jim, Capital will be credited for $15,000.

D) Bill, Capital will be credited for $15,000.

E) None of the above

37) Which of the following is TRUE when a new partner is admitted to a partnership by purchasing an existing partner's interest?

A) Only the transfer of cash from the new partner to the existing partner is recorded.

B) Admission of the new partner affects the total asset amount.

C) Admission of the new partner affects the total equity amount.

D) The only journal entry the partnership records is the transfer of partner's capital.

E) None of the above

38) Frank and Harry are partners. Frank has a capital balance of $51,000 and Harry has a capital balance of $40,000. Bill contributes a building with a fair market value of $27,000 to the partnership for an ownership interest of 20%. Calculate Bill's capital in the new partnership.

A) $13,000; B) $27,000; C) $24,000; D) $23,600; E) None of the above

39) Sarah and Jane formed a partnership with capital contributions of $210,000 and $123,000, respectively. Peter contributed $86,000 to acquire an ownership interest of 12% in the new partnership. How much is the total bonus for the existing partners?

A) $86,000; B) $35,720; C) $50,280; D) $17,860; E) None of the above

40) Lauren and Elizabeth are partners. Lauren has a capital balance of $125,000 and Elizabeth has a capital balance of $110,000. Harry invested $100,000 to acquire an ownership interest of 30%. The journal entry to record the receipt of Harry's contribution will ________.

A) decrease Lauren, Capital; B) increase Elizabeth, Capital; C) decrease Cash; D) decrease Harry, Capital; E) None of the above

Answer 1

35. True, because when a new partner is admitted the old partnership gets dissolved and a new partnership firm is evolved under which a new existing agreement come into existence.

36. D. ​Bill, Capital will be credited for​ $15,000.

37. D. The only journal entry the partnership records is the transfer of partner's capital

38. D. Bill's Capital = (51,000 + 40,000 + 27,000) x 20% = 118,000 x 20% = $23600

39. B. $35,720

=210000+123000+86000=419000

=419000*0.12=$50280

=86000-50280=$35720

40. A) decrease Lauren, because of bonus given to harry,