Review 12 - Chapter Twelve Partnerships Learning Objectives...

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Chapter Twelve: Partnerships Learning Objectives Upon completion of Chapter Twelve, the students will be able to: 1. Identify characteristics of partnerships and similar organizations. 2. Identify similarities and differences in the accounting for sole proprietorships, partnerships and corporations. 3. Prepare entries for partnership formation. 4. Allocate and record income and loss among partners. 5. Account for the admission and withdrawal of partners. 6. Prepare entries for partnership liquidation. Directions for Studying Chapter Twelve and Completing the Assignments 1. Read pages 480-482 for the terminology and characteristics of partnerships. What are the characteristics of a partnership? What are the differences between partnerships, sole proprietorships, and corporations? What are the different kinds of partnerships? 2. Work the Quick Check on page 482. Check your answers on page 495. 3. Work Quick Studies 12-1 and Exercise 12-1. These exercises are not in Connect. Work them from the information at the end of the chapter, pages 497 and 498. You don’t need to submit these. If you have questions about what the answer should be, you can ask me. Post any question you have on the discussion board. There is a topic on the discussion board for each chapter. 4. Study page 483-485 for information on basic accounting for forming a partnership and dividing income. Entries for partnerships are the same as those for a sole proprietorship except each partner has a separate capital and withdrawal account. Capital is credited for investments and the partner’s share of net income. Withdrawals is debited for the partner’s withdrawals. All other accounts and entries remain the same as those for a sole proprietorship. 5. Work the Quick Check on page 485. Check your answers on page 495. 6. Work Quick Studies 12-2 and Exercises 12-3 and 12-4 in Connect. These are the basic entries for partnerships. The investment and the increase to capital for the share of net income. This is the main concept in this chapter. Go over these exercises carefully, check your work and if you have trouble understanding the corrections in Connect, you can contact me for additional help. Be sure to ask questions if there is anything you don’t understand. Your goal is never just the right answer, but understanding what you did and why.
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7. Work Quick Studies 12-4 and Exercise 12-5 in Connect. These are math calculations on how to divide up income. Income is always credited to the Capital account, but if there is more than one owner, then there is more than one capital account. We need to calculate how much of the income should be credited to each partner. Study exhibits 12.1 and 12.2 on page 485. 8. Study pages 485-489 for entries for the addition or withdrawal of a partner. Remember to analyze entries the same way you did in chapter 2. What did the business get and what did it give up? If the business got cash, it is debited; but if the cash went to a partner then the business cash can’t be debited. Capital of a partner coming in goes up, a credit.
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