Chapter 16
True or false: According to the UPA of 1997, loans payable to a third party creditor must be subordinated to a loan received from a partner.
false
Identify the effect of the journal entry for loss on revaluation of noncash assets.
it reduces the capital account of all partners in the profit-sharing ratio
Which of the following is true regarding the apportionment of liquidation expenses to the partners' capital accounts?
liquidation expenses are allocated to the partners' capital accounts in the profit and loss distribution ratio.
Which of the following best defines a partner's loss absorption potential?
the maximum loss realizable before that partner's capital account balance is extinguished
A dissolution of a partnership created for a definite term takes place when after a partner's ________, at least half of the remaining partners decide to wind up the partnership business. Multiple choice question.
wrongful disassociation
Craig's net worth at the beginning of 20X1 was $30,000. During 20X1, he realized a $20,000 increase in net worth. His net unrealized net worth increased by 15,000. Calculate Craig's net worth at the end of 20X1.
$65,000 Reason: Craig's net worth at end of 20X1 = Net worth at the beginning of 20X1 + Increase in realized net worth + Increase in unrealized net worth = $30,000 + $20,000 + $15,000 = $65,000.
Francis, Leonard, and Daniel are partners. Francis has a 40% stake, while Leonard and Daniel each have 30% shares in the firm's profits and losses. On June 30, 20X1, the partners decided to liquidate the partnership. After absorbing the losses on the sale of noncash assets and the probable expenses on liquidation, Francis' capital account had a $21,600 credit balance, Leonard's capital account had a $6,300 debit balance (deficit to be allocated to Francis and Daniel as follows: $3,600 and $2,700, respectively), and Daniel's capital account had a $3,700 credit balance. Which of the following are true regarding the safe payments to the partners on July 31, 20X1?
-safe payment to Daniel= $1,000 -safe payment to Francis= $18,000
A partnership decided to liquidate its business on December 10, 20X1. On December 26, 20X1, the partners formulated and agreed upon a formal liquidation plan. On July 20, 20X2, the firm incurred a $20,000 cost with respect to liquidation. The liquidation was finalized on March 15, 20X3. The $20,000 liquidation cost must be recognized in the year ________
20X2
To record the issuance of stock for a partnership's assets and liabilities on the books of a new corporation, Paid-in Capital in Excess of Par would be ________
credited
The process of winding-up a partnership begins after the partnership's ________
dissolution
Brian, Christopher, and Donald are partners, sharing profits and losses in the ratio of 3:2:5. On May 1, 20X6, the partners decided to liquidate their partnership. After allocating the loss on the sale of noncash assets, Brian's capital had a $4,500 credit balance, Christopher's capital had a $1,000 credit balance, and Donald's capital account had a $4,500 deficit. Donald's capital deficit was absorbed by Brian and Christopher proportionately to their profit and loss sharing ratio. After allocating Donald's deficit, Brian's capital account had a $1,800 credit balance, while Christopher's capital account had a $800 deficit. Calculate the safe payment attributable to Brian upon liquidation.
$1,000 Reason: Safe payments = $1,800 - $800 = $1,000.
Kevin and Jordan are partners, sharing profits and losses in the ratio of 40:60. On February 13, 20X1, they decide to liquidate their partnership. The firm incurred liquidation expenses of $20,000. Calculate the liquidation costs attributable to Jordan. Multiple choice question.
$12,000 Reason: Allocation of liquidation costs to Jordan = Share of profits and losses × Liquidation costs = 60% × $20,000 = 12,000.
On March 1, 20X1, a firm decides to liquidate. One of the partner's capital accounts has a $45,000 credit balance. Assuming that the partner's share of the firm's profits and losses is 30%, calculate her loss absorption potential.
$150,000 Reason: Loss absorption potential = Partner's capital account balance ÷ Partner's loss share = $45,000 ÷ 30% = $150,000.
A partnership has three partners sharing profits and losses equally. In liquidation, losses on the sale of assets are allocated to the partner's capital accounts. Assume that one partner has a $20,000 deficit in his capital account. This partner becomes insolvent prior to liquidation. Which of the following is true regarding the distribution of the insolvent partner's deficit to the solvent partners' capital accounts? Multiple choice question.
the $20,000 deficit is allocated to the other partners based on their loss sharing ratio
Anthony, George, and Frank are partners. The profit and loss-sharing ratio for Anthony, George, and Frank is 40:20:40, respectively. On October 19, 20X1, the partners started the liquidation process. On the liquidation date, Anthony's capital account had a $50,000 credit balance, Gabriel's capital account had a $75,000 credit balance, and Frank's capital account had a $70,000 credit balance. The firm disposed of its noncash assets at a loss of $150,000. Calculate the deficit or surplus arising from the sale of noncash assets in Anthony's capital account at liquidation.
Deficit of $10,000 Reason: Deficit in Anthony's capital balance = Preliquidation capital balance - Share of loss on disposal of noncash assets = $50,000 - (40% × $150,000) = ($10,000).
The termination of a partnership is called ________
dissolution
Raul, Edgar, and Milton are partners, sharing profits and losses in the ratio of 30:40:30. On January 1, 20X1, the partners decide to incorporate their partnership. The partnership's assets are revalued to their fair values on that date. The partnership recognizes a $50,000 revaluation loss. Which of the following is the journal entry to record the allocation of the revaluation loss to the partner's capital accounts? Multiple choice question.
debit Raul's capital account by $15,000, Edgar's capital account by $20,000, Milton's capital account by $15,000; credit noncash assets by $50,000
Assume that a liquidating partnership paid $50,000 in cash to settle its creditors and other liabilities in full. Which of the following is the journal entry to record this transaction? Multiple choice question.
debit liabilities for $50,000; credit cash for $50,000
After a partnership is incorporated, the capital stock was distributed to the individual partners. In the journal entry recording the distribution of the capital stock, individual partners' capital accounts are ________
debited
According to the UPA of 1997, the obligation of a partnership to satisfy its debts on liquidation effectively ends in the ________ subordination of the internal debt and external debt.
equitable
Sam, Rebecca, and Gideon are partners in the SRG Partnership. The profit and loss-sharing percentages are Sam: 40%, Rebecca: 30%, and Gideon: 30%. On February 1, 20X1, when the partners decided to liquidate their business, Sam's capital account had a $20,000 credit balance, Rebecca's capital account had a $5,000 credit balance, and Gideon's capital account had a $15,000 credit balance. The firm's noncash assets were sold at a $40,000 loss. Assuming that Rebecca is personally insolvent, calculate Sam's allocated share of Rebecca's deficit.
$4,000 Reason: Deficit in Rebecca's capital account = ($5,000 - ($40,000 × 30%)) = $7,000; Sam's share of the deficit in Rebecca's capital account = $7,000 × 40/70 = $4,000.
Calculate the net unrealized increase in Eugene's net worth for the year ending December 31, 20X1 considering the following data. He is a partner in the DEW Partnership. For the year 20X1, the value of Eugene's investment in DEW Partnership increased by $2,000. His marketable securities increased in value by $6,000. For the year 20X1, Eugene's estimated income taxes on the difference between the estimated current value of his assets and liabilities and their tax bases increased by $4,000. Multiple choice question.
$4,000 Reason: Net unrealized increase in net worth = Unrealized increases in value of investment in DEW Partnership + Unrealized increases in marketable securities - Increase in estimated income taxes on the difference between the estimated current values of assets and liabilities and their tax bases = $2,000 + $6,000 - $4,000 = $4,000.
Eric, Jack, and Jose decide to incorporate their partnership on January 31, 20X1. On that date, the fair value of the partnership's noncash assets was $50,000. The partnership has a $25,000 cash balance. The firm has liabilities of $30,000. Calculate the fair value of the partnership's net assets. Multiple choice question.
$45,000 Reason: Fair value of net assets = Cash + Fair value of noncash assets - Liabilities = $25,000 + $50,000 - $30,000 = $45,000.
The methods and assumptions used to compute the estimated tax bases are disclosed as part of ________
a footenote
Abraham and Gabriel were partners, sharing profits and losses in in a 30:70 ratio. On September 20, 20X1, the partners started the liquidation process. On the date of liquidation, Abraham's capital account had a $15,000 credit balance and Gabriel's capital account had a $12,000 credit balance. In disposing of its noncash assets, the firm recognized a loss of $20,000. Which of the following are true regarding the surplus or deficit in the partners' capital accounts after distributing the loss on disposal?
-Abraham's capital account had a credit balance of $9,000 -Gabriel's capital account had a debit balance of $2,000
When a partnership's noncash assets are disposed of at a loss during liquidation, that loss is allocated to the ________ ________ accounts.
partner's capital
The NVP Partnership has three partners, Ned, Valarie, and Paul. The profit and loss-sharing percentages for Ned, Valarie, and Paul are 30%, 40%, and 30%, respectively. On February 28, 20X1, the partners decided to liquidate their business and initiated the winding-up process. On the liquidation date, Ned's capital account had a $50,000 credit balance, Valarie's capital account had a $20,000 credit balance, and Paul's capital account had a $75,000 credit balance. In the course of liquidation, the firm sold its noncash assets at a $70,000 loss, allocated to Ned, Valarie, and Paul as follows: $21,000, $28,000, and $21,000, respectively. Calculate the deficit or surplus in Valarie's capital account after allocating the loss on the sale of the noncash assets to the partners' capital accounts.
Deficit of $8,000 Reason: Capital account balance = Partner's capital - Proportional share of loss on sale of the noncash assets = $20,000 - $28,000 = ($8,000).
In the journal entry to record the lump-sum payment of the remaining cash balance from liquidation to its partners, a partnership would ________ its partners' capital accounts.
debit
Edward, Simon, and Paul were partners sharing profits and losses in the ratio 30:50:20. The partners decided to liquidate their business on March 15, 20X1. On that date, Edward's capital account had a $30,000 credit balance, Simon's capital account had a $50,000 credit balance, and Paul's capital account had a $10,000 credit balance. On the liquidation date, the firm had a $20,000 cash balance. The book value of the firm's various noncash assets totaled $220,000. The firm has liabilities of $150,000. The firm sold its noncash assets at a $95,000 loss. After the allocation of the losses from the sale of noncash assets to the capital accounts of the partners, Paul's capital account had a $9,000 deficit. Paul had been declared insolvent and hence could not remedy the deficit in his capital account. Paul's capital account deficit was distributed to Edward and Simon. Calculate the deficit arising out of this transaction in Edward's capital account.
$1,875 Reason: Deficit in Edward's capital account = Preliquidation capital balance - Share of losses from the sale of noncash assets - Share of insolvent partner's deficit = $30,000 - ($95,000 × 30%) - ($9,000 × 30/80) = $1,875.
A partnership is undergoing a liquidation process. It realizes $500,000 on the sale of its noncash assets. The firm settles its liabilities of $420,000 and subsequently pays a loan of $70,000 received from a partner in full. The three partners agreed to share the profits or losses on liquidation in the ratio of 40:40:20. Calculate the remaining amount distributable, if any, to the firm's partners on liquidation. Multiple choice question.
$10,000 Reason: Amounts payable to the partners on liquidation = Proceeds from the sale of noncash assets - Settlement of liabilities - Payment of loan to partner = $500,000 - $420,000 - $70,000 = $10,000.
Don, Eddie, and Fredrick are partners in the DEF Partnership. Don and Eddie's shares of profits and losses is 40% each, while Fredrick's share is 20%. On July 1, 20X1, the partners decide to liquidate. The capital account balances of Don, Eddie, and Fredrick on the liquidation date are $60,000, $50,000, and $20,000, respectively. Don, Eddie, and Fredrick's loss absorption potentials are $150,000, $125,000, and $100,000, respectively. Calculate the first payment to Don based on the cash distribution plan. Multiple choice question.
$10,000 Reason: Cash distribution to Don when LAP is reduced from $150,000 to $125,000 = ($150,000 - $125,000) × Percentage of holding = $25,000 × 40% = $10,000.
Jerome, Alwyn, and Floyd have decided to incorporate their partnership. They share profits in the ratio 30:40:30. The noncash assets of the firm are revalued to their fair values. The firm recognizes a $40,000 revaluation gain on their noncash assets. Calculate the share of revaluation profits allocated to Floyd. Multiple choice question.
$12,000 Reason: Share of revaluation profits = Share of profits or losses × Revaluation profits = 30% × $40,000 = $12,000.
On December 31, 20X1, a partnership began the liquidation process. The firm had 3 partners, Mark White, Tony Books, and Andrew Border. On the liquidation date, the partnership owed $20,000 to Andrew Border. Andrew Border's capital account had a deficit of $8,000. Assuming the right of offset, calculate the amount payable to or receivable from Andrew Border on liquidation. Multiple choice question.
$12,000 payable to Andrew Border Reason: Amount payable to Andrew Border = Loan amount - Capital account deficit = $20,000 - $8,000 = $12,000.
On April 20, 20X1, Jonathan, Steve, and Mark decided to liquidate their partnership. A formal liquidation plan was prepared and accepted by the partners on May 31, 20X1. On that date, the carrying value of land on the firm's books was $150,000. After accepting the liquidation plan, the partners engaged a valuation specialist to determine the land's fair value. The specialist assessed the land's fair value to be $180,000. The firm expected to incur a $50,000 cost in selling the land. According to ASC 360, the value of land to be presented in the financial statements would be
$130,000 Reason: Value of land according to ASC 360 = Lower of carrying value and the fair value less expected cost of sales = Lower of $150,000 and ($180,000 - $50,000 = $130,000) = $130,000.
On December 31, 20X1, a partnership decided to dissolve its business. It began the winding-up process and liquidation after its decision to dissolve. The partnership had no cash at the time it decided to dissolve. The partnership received $30,000 from the disposal of its fixed assets. It collected $40,000 of its receivables. It paid $50,000 of its payables. Calculate the amount distributed to the partners.
$20,000 Reason: The amount distributed to the partners = Proceeds received - Payments made = ($40,000 + $30,000) - $50,000 = $20,000.
Jeff, a partner in the JMC Partnership, has a $200,000 loss absorption potential. Which of the following is true regarding Jeff's loss absorption potential? Multiple choice question.
$200,000 in losses from the sale of noncash assets would eliminate the credit balance in Jeff's capital account
George, Gregory, and Evan are partners, sharing profits and losses from continuing operations in a 40:40:20 ratio. Their agreement also states that the same ratio must be applied in liquidation. On December 31, 20X1, the partnership was in the process of liquidation. The partnership received $100,000 as proceeds from the sale of its noncash assets. On December 10, 20X1, Evan had a $5,000 deficit in his capital account. This amount was recovered from Evan in cash at the year-end date. Gregory repaid a $20,000 loan from the partnership on December 31, 20X1. Total assets before paying out liabilities and liquidation on December 31, 20X1 were $125,000. The firm settled its liabilities to creditors by paying a total amount of $75,000. The partnership also paid a loan from George amounting to $25,000 prior to liquidation. Calculate the remaining cash that will be payable to George and Gregory in liquidation.
$25,000 Reason: Remaining assets attributable to partners after paying liabilities = $125,000 - ($75,000 + $25,000) = $25,000
Jacob, Matthew, and Peter decided to liquidate the JMP Partnership. On July 31, 20X1, their capital balances were $20,000, $45,000, and $65,000, respectively. Jacob, Matthew, and Peter share profits and losses based on a ratio of 25:35:40, respectively. On the liquidation date, the firm's cash balance was $100,000 and its other noncash assets were $100,000. The total claims of creditors amounted to $70,000. The noncash assets of the firm were sold for $20,000. In the winding-up process, the creditors were paid in full. Assuming that all the partners (and the partnership) were solvent at the time of liquidation, calculate the total lump-sum cash payable to Peter on liquidation. Multiple choice question.
$33,000 Reason: Lump-sum cash payment to Peter = Capital balance on the date of liquidation - Share of loss on the sale of noncash asset = $65,000 - ($80,000 × 40%) = $65,000 - $32,000 = $33,000.
Stuart, Kevin, and Yves are partners in the SKY Partnership. According to the partnership agreement, Stuart's share of profits and losses is 25%, Kevin's share is 50%, and Yves' share is 25%. On April 30, 20X5, SKY Partnership decided to liquidate. The partnership had a $40,000 cash balance. Note that the book value of its noncash assets of $65,000 were completely written off, based on technological obsolescence. The firm had obligations of $45,000 on the date of liquidation. Prior to liquidation, Stuart's capital account had a $22,000 credit balance. Kevin's capital account had an $18,000 credit balance, and Yves' capital account had a $20,000 balance. Allocation of the loss on the writing off of the noncash assets resulted in a $14,500 debit balance in Kevin's capital account. Assuming that Kevin was insolvent at the time of liquidation, calculate the total cash contribution which Yves and Stuart would need to make to ensure that the partnership is able to pay its creditors in full. Multiple choice question.
$5,000 Reason: Total deficit of cash = Preliquidation cash balance + Proceeds from sale of noncash assets - Liabilities payable = $40,000 + $0 - $45,000 = Deficit of $5,000.
Michael, Jim, and Alexander decided to liquidate their partnership, MJA. On June 30, 20X1, their capital balances were $10,000, $15,000, and $35,000, respectively. Michael, Jim, and Alexander share profits and losses in the ratio of 40:30:30, respectively. On the liquidation date, the firm's cash balance was $20,000. The other noncash assets were $80,000. The firm's total liabilities were valued at $40,000. The firm's noncash assets were sold for $70,000. In the winding-up process, the liabilities were paid in full. Assuming that all partners (and the partnership) were solvent at the time of liquidation, calculate the total lump-sum payment to all the partners on liquidation.
$50,000 Reason: Lump-sum payment to all the partners = Cash balance on June 30, 20X1 + Proceeds received from the sale of noncash assets - Payment to creditors = $20,000 + $70,000 - $40,000 = $50,000.
Stephen, Shane, and Joy decided to liquidate their partnership on May 1, 20X1. A formal plan of liquidation was drafted and accepted on May 10, 20X1. Stephen's share of profits and losses was 40%, Shane's share was 30%, and Joy's share was 30%. The firm had liabilities of $30,000 at the beginning of May. Its cash balance on May 1, 20X1 was $50,000. On May 15, 20X1, the partnership sold assets worth $50,000 for a $10,000 loss. Calculate the cash balance at the end of May 20X1, assuming that the partnership repaid all its creditors in May 20X1. Multiple choice question.
$60,000 Reason: Cash balance at the end of May 20X1 = Beginning balance + Proceeds from the sale of assets - Payment to creditors = $50,000 + ($50,000 - $10,000) - $30,000 = $60,000.
Joseph, Timothy, and Leander decided to liquidate their partnership on January 25, 20X1. The partnership agreement specifies that the partners share profits or losses in the ratio of 30:40:30. On the liquidation date, Leander's capital account had a $21,000 deficit. Assuming that Leander is personally insolvent, calculate the deficit from Leander's capital account allocated to Joseph's capital account. Multiple choice question.
$9,000 Reason: Joseph's share of deficit of Leander's capital account = Deficit of Leander's capital account × Proportion of share of losses = $21,000 × (30/70) = $9,000.
Stephen, Ethan, and Elizabeth decided to liquidate the SEE Partnership. According to the partnership's trial balance on May 31, 20X1, Stephen, Ethan, and Elizabeth's capital balances were $40,000, $75,000, and $125,000, respectively. They share profits and losses based on a 35:15:50 ratio. On the liquidation date, the firm's cash balance was $125,000 and the book values of the other noncash assets totaled $150,000. The total claim of creditors of the firm was $35,000. The firm's noncash assets were sold for $120,000 resulting in a loss from sale of non-cash assets of $30,000. In the winding-up process, the creditors were paid in full. Assuming that all of the partners (and the partnership) were solvent at the time of the liquidation, which of the following are true regarding the partners' capital balances immediately before cash is distributed to the partners?
-Elizabeth's capital account had a credit balance of $110,000. -Ethan's capital account had a credit balance of $70,500. -Stephen's capital account had a credit balance of $29,500.
The RST Partnership has three partners, Richard, Sean, and Travis, who share profits and losses in the ratio 40:40:20. The firm has $50,000 of liabilities. Richard's, Sean's, and Travis's loss absorption potentials are $25,000, $20,000, and $15,000, respectively. Their capital accounts are $10,000, $8,000, and $3,000, respectively. Which of the following are true regarding Richard's and Sean's capital accounts after distributions result in the partners' loss absorption potentials being equal?
-Richard's capital account: credit balance of $6,000 -Sean's capital account: credit balance of $6,000
Miles, Yards, and Steps are the three partners of a public accounting firm, sharing profits and losses in a ratio of 4:3:3. On December 31, 20X1, when the firm was undergoing winding-up procedures, Steps was declared insolvent. On that date, she owed $3,500 to the firm and failed to make a required contribution to remedy her capital balance. Which of the following are true of the amounts to be absorbed by Miles and Yards to eliminate Step's capital deficit?
-Yards much absorb an additional $1,500 to Step's capital deficit. -Miles must absorb an additional $2,000 to Step's capital deficit.
Which of the following are types of disassociation of a partner?
-a partner's death -a partner's voluntary withdrawal -a judicial determination
On January 1, 20X1, Smith, Track, and Kepler enter into a partnership to construct a bridge across a river. The project was expected to be completed in 2 years. Identify which of the following could cause the partnership's dissolution under Section 801 of UPA 1997.
-agreement between all the partners to wind up the partnership. -death of a partner and decision by at least half of the remaining partners to wind up partnership business. -the completion of the construction of the bridge.
Which of the following are true regarding the valuation of a partner's assets and liabilities in the personal statement of assets and liabilities?
-assets are stated at their estimated current values. -liabilities are stated at the lower of the discounted value of future cash payments or the current cash settlement amount.
Which of the following are paid before any cash is disbursed to settle the partners' capital accounts?
-bank loans -creditors -loans received from partners
Walter, Arthur, and Ryan incorporated their partnership. The new incorporated entity issued 5,000 shares of $2 par common stock to acquire the partnership's net assets. The fair value of the partnership's noncash assets is $75,000. The partnership has a $25,000 cash balance. The carrying value of the partnership's liabilities is $50,000. Which of the following are true regarding the journal entry needed to record the issuance of stock on the new corporation's books?
-credit paid-in capital in excess of par for $40,000 -debit noncash assets for $75,000
On January 1, 20X1, the partners of AMC Partnership decide to incorporate their partnership into AMC, Inc. On the incorporation date, the partners' capital accounts have the following credit balances: Andrew: $20,000, Michael: $15,000, and Charlie: $10,000. Partners received stock in AMC Inc. in proportion to the credit balances in their capital accounts. Which of the following are true regarding the journal entry needed to record the distribution of AMC, Inc.'s capital stock to the partners? Assume that the total investment in AMC, Inc. is $45,000.
-debit Michael, capital for $15,000 -credit investment in AMC Inc. for $45,000 -debit Charlie, capital for $10,000 -debit Andrew, capital for $20,000
A partnership consisting of three partners, Stanley, Morgan, and Roberts, entered liquidation on April 1, 20X1. According to the partnership agreement, Stanley's share of the firm's profits or losses in liquidation was 30%, Morgan's share was 40%, and Roberts' share was 30%. Noncash assets having a $60,000 book value were sold for $50,000. Which of the following are true regarding the journal entry to record the sale of the noncash assets and the distribution of losses resulting from the sale to the partners' capital accounts?
-debit cash for $50,000 -debit Morgan's capital for $4,000 -debit Stanley's capital for $3,000 -debit Robert's capital for $3,000
Which of the following should a partner's personal balance sheet present?
-estimate of the income taxes incurred, assuming assets are converted and liabilities are extinguished. -partner's assets and liabilities.
Which of the following are true regarding the accounting treatment for long-lived assets to be disposed of by sale, per ASC 360?
-long-lived assets to be disposed of by sale must be recorded at the lower of carrying amount or fair value less costs to sell. -long-lived assets to be disposed of by sale must be classified separately.
A partner has prepared his personal financial statements. Which of the following are disclosures that need to be made as a footnotes to the financial statements?
-the names and the nature of businesses in which the person has major investments. -the methods used to value the major assets. -maturities, interest rates, and other details of any receivables and debt.
DPA is a public accounting firm with partners Derek, Phil, and Adam. The partners share profits or losses in the following ratio: 20:30:50. The partners decided to liquidate their business on November 20, 20X1. On that date, Derek's capital account had a $100,000 credit balance, Phil's capital account had a $75,000 credit balance, and Adam's capital account had a $25,000 credit balance. On the liquidation date, the firm's various noncash assets were sold at a $60,000 loss. Calculate Adam's capital account balance after this loss has been allocated to the partners' capital accounts.
Debit balance of $5,000 Reason: Debit balance of Adam's capital account = Preliquidation balance - Share of loss on sale of noncash assets = $25,000 - ($60,000 × 50%) = $5,000.
On July, 1, 20X1, Gilbert, Gene, and Max decide to incorporate their partnership to avail themselves of further tax benefits. Gilbert, Gene, and Max shared profits and losses in the ratio of 30:40:30. The new corporation, GGM Inc., issues capital stock with a total value of $200,000 to Gilbert, Gene, and Max. The new corporation would issue capital stock to Gilbert, Gene, and Max in proportion to their Multiple choice question.
capital held in the partnership
In determining a partner's assets and liabilities, the ________ method of accounting should be used.
accural
