30 Questions
After the admission of Mouse, what would be the capital balance of Dog assuming Mouse paid P250,000 for 50% of his interest?
P450,000
In scenario 2, if Mouse invested P250,000 for a one-fourth interest in the partnership, what will be the total capital balances after Mouse's admission?
P800,000
Assuming Mouse invested P250,000 for a 30% interest in the partnership, what will be Cat's capital balance after the admission?
P475,000
If Mouse invested P250,000 for a 20% interest in the partnership, what would be the new profit and loss sharing ratio?
3:3:2
What would be Greg's capital balance after retiring from the partnership?
P280,000
In scenario 1 with Mouse paying P250,000 for 50% of Dog's interest, how much is Mouse's capital balance after admission?
P250,000
What are the two ways a new partner can be admitted into a partnership?
Purchasing interest of an existing partner or investing assets
When admitting a partner by purchase of interest, who determines the price paid for the interest?
Individuals involved in the transaction
What happens to any money or consideration exchanged in the admission of a partner by purchase?
It becomes personal property of the participants involved
In the given transaction where Carson agrees to pay Ames and Barker for part of their interest, how much capital balance does each partner have after Carson's admission?
$30,000 each
What changes when a partner is admitted by investment?
Both total net assets and total partnership capital change
Who gives up part of their capital equity when a new partner is admitted through purchase?
Existing partners only
What is the total amount that Morz and Nead agree to pay Odom for her interest?
P20,000
What happens to total assets and total partnership capital when using partnership assets to pay for a withdrawing partner's interest?
Both total assets and total partnership capital decrease.
What does a bonus to a withdrawing/retiring partner indicate?
The partnership's assets have increased in value.
What is the basis for deducting the bonus from the remaining partners' capital balances?
The remaining partners' income ratios at the time of the withdrawal.
What happens to the remaining partners' capital balances when a bonus is paid to a withdrawing/retiring partner?
Their capital balances decrease.
What could cause a bonus to be paid to a withdrawing/retiring partner?
The remaining partners are anxious to remove the partner from the firm.
What happens to the partnership when a partner dies?
The partnership continues with the remaining partners
How is the deceased partner’s equity determined at the date of death?
By determining the net income or loss for the year to date, closing the books, and preparing financial statements
How do the surviving partners settle with the deceased partner's estate?
By purchasing the deceased partner’s equity from their personal assets
What happens when a partnership is converted into a corporation?
The corporation takes over the assets and assumes the liabilities of the partnership in exchange for shares of stocks
How are the shares of stocks distributed when a partnership is converted into a corporation?
They are distributed to the partners in settlement of their interest
What is the purpose of closing the books and preparing financial statements when a partner dies?
To determine the deceased partner’s equity at the date of death
What is the difference between purchasing an interest and admission by investment in a partnership?
Purchasing an interest does not change the total net assets and total capital, while admission by investment changes both
What happens when the new partner's investment is greater than the capital credit on the date of admittance?
It is considered a bonus to the old partners
What is the effect of Carson's investment in the Ames-Barker partnership?
Total net assets and total capital of the partnership increase
What happens to the difference when the new partner's investment differs from the capital equity acquired?
It is considered a bonus to the existing partners
What is the significance of Carson investing P30,000 in cash in the Ames-Barker partnership for a 1/3 capital interest?
Total net assets and total capital of the partnership increase
What is the effect of a bonus to old partners on the partnership?
Total net assets remain the same but total capital increases
Explore the process of admitting a new partner in a partnership accounting context, either through purchasing the interest of an existing partner or by investing assets in the partnership. This quiz covers concepts from the 2020-2021 Module Packets for AE 13 (Partnership & Corporation Accounting) from the College of Commerce at the University of San Agustin, Iloilo City, Philippines.
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