Question

9. Final distribution of partnership cash in made in according to what rule:

a. partner with highest capital balance paid first

b. partner who joined the partnership earliest is paid first

c. partner who worked the hardest is paid first

d. partners are paid in proportion to original profit and loss percentages

e. partners are paid in proportion to final capital balances

10. Which is true about obligations due to partnership creditors in a liquidation of a partnership.

a. partnership creditors may claim against any partner’s personal assets

b. partnership creditors may claim against any partner’s personal creditors

c. partnership creditors may claim against other partnership creditors

d. partnership creditors may claim to the lesser of partnership cash or any partner’s positive capital balances

e. partnership creditors may claim to the higher of partnership cash or any partner’s positive capital balances

11. Partner Xiao is insolvent, having no personal assets and owes $50,000 to his personal creditors. Xiao is a partner with Williams and Zellin and the partnership balance sheet is as follows:

                                         Partnership Balance Sheet

Cash                 $240,000                           Liabilities                 $150,000

                                                                   Xiao Capital            20,000

                                                                   Williams Capital          30,000

                                                                   Zellin Capital               40,000

How much can Xiao’s personal creditors claim against partnership cash

1. $20,000
2. $50,000
3. $90,000
4. $150,000
5. $240,000

12. Foot and Shoe organize a partnership and agree both will begin with equal capital balances. Foot contributes fixed assets with a fair value of $80,000. Shoe contributes inventory with a fair value of $20,000 and his expertise. It is decided that they will use the goodwill method to account for the partners capital. How much is the total goodwill to be recorded by the partnership.

a. 0

b. $20,000

c. $40,000

d. $60,000

e. $100,000

Answer 1

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