31. Sally Smythe enters into a partnership by contributing the following:
Cash, $15,000; Accounts Receivable $4,500; Machinery which cost $3,000 and has a fair market value of $2,125; and accounts payable of $1,200. What amount will be recorded in her capital account?
A. $21,625.
B. $20,425.
C. $22,500.
D. $21,300.
32. Partner A earns $68,000 from a partnership. Partner B earns $57,000 but withdraws only $49,000 how much must Partner B report in his income tax return as income
A. $49,000.
B. $57,000.
C. $125,000.
D. $117,000.
Essay Questions
33. A and B are partners. A has $50,000 in his capital account and B has $75,000 at the beginning of the year. A receives a salary of $15,000 and B receives $12,000. Each partner receives 5% of the beginning balance of their capital accounts. The remainder is split 45% to A and 55% to B. Net income for the year was $125,000. What is the amount of each capital account at year-end?
34. C, D & E are partners. C has $25,000 in her capital account. D has $35,000 in hers and E has $45,000. Each gets a salary allowance of $15,000. C gets 10% interest on the beginning balance in the capital account, D gets 12% and E gets 14%. The remainder is divided 20% to C, 35% to E, and 45% to E. What is the balance in the capital account at the end of the year if net income was $80,000?
35. Grey, Dailey and Sanders have formed a partnership. Net income for the first year amounted to $50,400. The partnership agreement states that Grey will receive a salary of $10,000, Dailey will receive $15,000 and Sanders will receive $20,000. They each have capital accounts of $30,000, $40,000 and $50,000 respectively. The contract calls for interest of 12% of their beginning capital balances for each partner. Any profit or loss will be split equally. How much income will each partner receive?