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Questions

Questions

1.

LO 15.1Does a partnership pay income tax?

2.

LO 15.1Can a partner’s personal assets in a limited liability partnership be at risk?

3.

LO 15.2Can a partnership assume liabilities as part of one of the partner’s contributions?

4.

LO 15.2Does each partner have to contribute an equal amount of assets in order to split profit and losses?

5.

LO 15.3What types of bases for dividing partnership net income or net loss are available?

6.

LO 15.3Angela and Agatha are partners in Double A Partners. When they withdraw cash for personal use, how should that be recorded in the accounting records?

7.

LO 15.3On February 3, 2016 Sam Singh invested $90,000 cash for a 1/3 interest in a newly formed partnership. Prepare the journal entry to record the transaction.

8.

LO 15.5Why do partnerships dissolve?

9.

LO 15.5What are the four steps involved in liquidating a partnership?

10.

LO 15.5When a partner withdraws from the firm, which accounts are affected?

11.

LO 15.5What is the first step in a partnership liquidation (termination and sale of assets)?

12.

LO 15.5When a partnership liquidates, do partners get paid first or do creditors get paid first?

13.

LO 15.5Coffee Partners decides to close due to the increased competition from the national chains. If after liquidating the noncash assets there is not enough cash to cover accounts payable, what happens?