Changes to Partnerships

Changes to Partnerships

12th Grade

8 Qs

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Changes to Partnerships

Changes to Partnerships

Assessment

Quiz

Business

12th Grade

Practice Problem

Medium

Created by

Ross Cornes

Used 2+ times

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8 questions

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1.

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

X and Y are in partnership. Z was admitted to the partnership on 1 July 2018.

It was also agreed that at that date:

1 Assets of the partnership would be valued upwards by $48 000.

2 Value of goodwill would be $20 000, but no goodwill account would be retained in

the books of account.

3 Z would introduce $80 000 cash.

4 Profit and loss sharing ratio would be X, Y and Z, 2 : 1 : 1 respectively.

What was Z’s capital account balance immediately after the admission?

$63 000

$75 000

$87 000

$97 000

2.

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

P and Q are in partnership. R was admitted as a partner on 1 July 2018, and the profit and loss

sharing ratio among P, Q and R was 2 : 2 : 1 respectively.

For the purpose of R’s admission, the partners agreed:

goodwill would be valued at $20 000, but not retained in the books of account

R would introduce cash, $40 000, and motor vehicle, $10 000

R would be entitled to an annual salary, $5000.

What was R’s capital account balance immediately after his admission?

$36 000

$46 000

$51 000

$51 000

3.

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

L, M and N are in partnership sharing profits and losses equally.

L retired when the credit balances on her capital and current accounts were $100 000 and

$40 000.

Partnership assets were revalued upwards by $60 000.

L took half of the amount due to her on retirement. The other half was left as a loan to the business.

How much was L paid from the partnership bank account on her retirement?

$20 000

$40 000

$60 000

$80 000

4.

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

Alice and Bharti have been in partnership sharing profits and losses in the ratio of 3 : 2. The balances on the partners’ capital accounts at 31 December 2018 are shown.

Alice $32000

Bharti $18000

The partners decided to share profits and losses equally with effect from 1 January 2019. There

was no goodwill account in the books. Goodwill is valued at $30 000 and is not to be retained in

the books of account.

What is the balance on Alice’s capital account after the adjustment for goodwill?

$15 000

$18 000

$35 000

$50 000

5.

MULTIPLE CHOICE QUESTION

10 mins • 1 pt

X and Y had been in partnership sharing profits and losses equally.

On 1 July 2018, Z was admitted as partner and the three partners shared profits and losses

equally.

On that date assets were revalued and there was a profit on revaluation, $36 000.

What were the accounting entries to record the profit on revaluation?

credit X current account $18 000, credit Y current account $18 000

credit X current account $12 000, credit Y current account $12 000, credit Z current account $12 000

credit X capital account $18 000, credit Y capital account $18 000

credit X capital account $12 000, credit Y capital account $12 000, credit Z capital account $12 000

6.

MULTIPLE CHOICE QUESTION

1 min • 1 pt

Goodwill is adjusted in partners’ accounts when there is a change in the profit sharing ratio.

How is this recorded?

debit capital accounts in new profit sharing ratio

credit capital accounts in old profit sharing ratio

debit capital accounts in old profit sharing ratio

credit capital accounts in new profit sharing ratio

debit current accounts in new profit sharing ratio

credit current accounts in old profit sharing ratio

debit current accounts in old profit sharing ratio

credit current accounts in new profit sharing ratio

7.

MULTIPLE CHOICE QUESTION

5 mins • 1 pt

X, Y and Z were in partnership sharing profits and losses in the ratio 5 : 3 : 2 respectively.

The capital account balances before any adjustments were $40 000, $30 000 and $20 000

respectively.

Z retired from the partnership. X and Y continued in partnership, sharing the profits and losses in

the ratio 3 : 2 respectively.

Net assets were to be revalued upwards by $10000.

What was the capital account balance for partner X following Z’s retirement?

$35 000

$39 000

$41 000

$45 000

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