Question

(26) Assume that the capital of an existing partnership is $130,000 and that existing assets are overvalued by $10,000. If an incoming partner acquires a 25% interest in the partnership for $37,000, good will traceable to the incoming partner is -a. $2,250 b. $9,667 c. $3,000 d. $5,000 (27) If an existing partner withdraws from a partnership, a. his or her interest may be sold to the partnership or an individual partner. b. the consideration received for that partner's interest may suggest the existence of undervalued existing assets and/or goodwill. c. either the bonus or the good will method may be used to record the transaction if the partnership acquires the withdrawing partner's interest. d. all of the above. (28) Partners Able, Baker, and Chapman have the following personal assets, personal liabilities, and partnership capital balances: Personal assets Personal liabilities Capital balances Able $30,000 25,000 50,000 Baker $ 80,000 50,000 (32,000) Chapman $60,000 72,000 70,000 Assume profits and losses are allocated equally. If Baker is in bankruptcy and is able to make a contribution, the capital balance for Able would be a. $50,000. b. $48,000. c. $49,000. d. $49,610. (29) Under the Revised Uniform Partnership Agreement, a. unsatisfied partnership creditors share pro rata with personal creditors in the assets of the partner's estate. b. unsatisfied partnership creditors have first priority against partnership assets. c. unsatisfied personal creditors have first priority against partnership assets. d. None of the above.

Answer 1

Answer:-

26.

(c) 3000

Capital Amount of Firm	130,000.00
Assets Overvalued	10,000.00
Actual Capital Position		120,000.00
Since the actual capital position for 75% share are	120,000.00
Then actual capital position for 25% share are		40,000.00
Amount Bring by New Partner		37,000.00
Amount as a goodwill of Partner		3,000.00

27.

(a) His or Her interest to be sold to the partnership or to the Individual Partner.

28.

(c) 49,000.00

	Able	Baker	Chapman
Personal Assets	30,000.00	80,000.00	60,000.00
Personal Liabilities	25,000.00	50,000.00	72,000.00
Capital	50,000.00	(32,000.00)	70,000.00
Deficiency of Baker		(2,000.00)
Deficiency will be shared equally because profit sharing ratio are equal	(1,000.00)	2,000.00	(1,000.00)
Capital Balance	49,000.00	-	69,000.00

29.

(c) Unsatisfied Partnership Creditors have first priority against partnership assets