Deane Martine has prepared the following list of statements about partnerships.
A partnership is an association of two or more persons to carry on as co-owners of a business
The legal requirements for forming a partnership can be quite burdensome.
A partnership is an accounting entity for financial reporting purposes.
The net income of a partnership is taxed as a separate entity.
The act of any partner is binding on all other partners, even when partners perform business
acts beyond the scope of their authority.
Each partner is personally and individually liable for all partnership liabilities.
When a partnership is dissolved, the assets legally revert to the original contributor.
In a limited partnership, only one partner can have unlimited liability.
Mutual agency is a major advantage of the partnership form of business.
Identify each statement as true or false. If false, indicate how to correct the statement.
Chris Crows, Siboney Cales, and Bonnie Carr are forming a partnership. Crows is
transferring $60,000 of personal cash to the partnership. Cales owns land worth $20,000 and a small
building worth $70,000, which she transfers to the partnership. Carr transfers to the partnership
cash of $11,000, accounts receivable of $34,000 and equipment worth $21,000.The partnership ex-
pects to collect $30,000 of the accounts receivable.
Prepare the journal entries to record each of the partners’ investments.
What amount would be reported as total owners’ equity immediately after the investments?
Pat Tillman has owned and operated a proprietorship for several years. On January 1,
he decides to terminate this business and become a partner in the firm of Tillman and Walker.
Tillman’s investment in the partnership consists of $14,000 in cash, and the following assets of the
proprietorship: accounts receivable $20,000 less allowance for doubtful accounts of $3,000, and
equipment $25,000 less accumulated depreciation of $5,000. It is agreed that the allowance for
doubtful accounts should be $4,000 for the partnership. The fair market value of the equipment
Journalize Tillman’s admission to the firm of Tillman and Walker.