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Sample Quiz for Chapter 15

# Sample Quiz for Chapter 15 - Indiana University of...

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Indiana University of Pennsylvania Department of Accounting ACCT 401/501: Advanced Accounting Dr. Rahman Sample Quiz for Chapter 15 Part I. Circle the best choice. Use the following information for questions 1, 2 and 3. Willis and Rite share profits and losses equally. Willis and Rite receive salary allowances of \$20,000 and \$30,000, respectively, and both partners receive 10% interest on their average capital balances. Average capital balances are calculated at the beginning of each month balance regardless of when additional capital contributions or permanent withdrawals are made subsequently within the month. Partners’ drawings are not used in determining the average capital balances. Total net income for 2009 is \$120,000. Willis Rite January 1 capital balances \$100,000 \$120,000 Yearly drawings (\$1,500 a month) 18,000 18,000 Permanent withdrawals of capital: June 3 (12,000) May 2 (15,000) Additional investments of capital: July 3 40,000 October 2 50,000 1. What is the weighted-average capital for Willis and Rite in 2009? a. \$100,000 and \$120,000 b. \$105,333 and \$126,667 c. \$110,667 and \$119,583 d. \$126,667 and \$105,333 2. If the average capital for Willis and Rite from question 1 is \$112,000 and \$119,000, respectively, what will be the total amount of profit allocated after the salary and interest distributions are completed? a. \$70,000 b. \$73,100 c. \$75,000 d. \$80,000

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Sample Quiz for Chapter 15 - Indiana University of...

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