Chapter 10 - Test Bank

Chapter 10 - Test Bank - Chapter 10 - Partnerships:...

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Unformatted text preview: Chapter 10 - Partnerships: Termination and Liquidation Chapter 10 Partnerships: Termination and Liquidation Multiple Choice Questions 1. When a partnership is insolvent and a partner has a deficit capital balance, that partner is legally required to: A. declare personal bankruptcy. B. initiate legal proceedings against the partnership. C. contribute cash to the partnership. D. deliver a note payable to the partnership with specific payment terms. E. None of the above. The partner has no legal responsibility to cover the capital deficit balance. 2. The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet: Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $12,000. If the noncash assets were sold for $234,000, what amount of the loss would have been allocated to Bartle? A. $43,200. B. $46,800. C. $40,000. D. $42,400. E. $43,100. 10-1 Chapter 10 - Partnerships: Termination and Liquidation 3. The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet: Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $12,000. The noncash assets were sold for $134,000. Which partner(s) would have had to contribute assets to the partnership to cover a deficit in his or her capital account? A. Abrams. B. Bartle. C. Creighton. D. Abrams and Creighton. E. Abrams and Bartle. 4. The Abrams, Bartle, and Creighton partnership began the process of liquidation with the following balance sheet: Abrams, Bartle, and Creighton share profits and losses in a ratio of 3:2:5. Liquidation expenses are expected to be $12,000. After the liquidation expenses of $12,000 were paid and the noncash assets sold, Creighton had a deficit of $8,000. For what amount were the noncash assets sold? A. $170,000. B. $264,000. C. $158,000. D. $146,000. E. $185,000. 10-2 Chapter 10 - Partnerships: Termination and Liquidation 5. The Keaton, Lewis, and Meador partnership had the following balance sheet just before entering liquidation: Keaton, Lewis, and Meador share profits and losses in a ratio of 2:4:4. Noncash assets were sold for $180,000. Liquidation expenses were $10,000. Assume that Lewis was personally insolvent and could not contribute any assets to the partnership, while Keaton and Meador were both solvent. What amount of cash would Keaton have received from the distribution of partnership assets? A. $38,000. B. $30,000. C. $24,000. D. $34,000. E. $31,600. 10-3 Chapter 10 - Partnerships: Termination and Liquidation 6. The Keaton, Lewis, and Meador partnership had the following balance sheet just before entering liquidation: Keaton, Lewis, and Meador share profits and losses in a ratio of 2:4:4. Noncash assets were sold for $60,000. How much will each partner receive in the liquidation?...
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This note was uploaded on 02/07/2012 for the course BU 5555 taught by Professor Mendez during the Spring '11 term at SUNY Farmingdale.

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Chapter 10 - Test Bank - Chapter 10 - Partnerships:...

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