Introduction to Accounting Chapter 12

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CHAPTER 12
Accounting for Partnerships
ASSIGNMENT CLASSIFICATION TABLE
Brief Exercises A Problems B Problems

Study Objectives 1. Identify the characteristics of the partnership form of business organization. 2. Explain the accounting entries for the formation of a partnership. 3. Identify the bases for dividing net income or net loss. 4. Describe the form and content of partnership financial statements. 5. Explain the effects of the entries to record the liquidation of a partnership. *6. Explain the effects of the entries when a new partner is admitted. *7. Describe the effects of the entries when a partner withdraws from the firm.

Questions 1, 2, 3, 4, 12

Exercises 1

5

1, 2

2, 3

1A

1B

6, 7, 8, 9, 10

3, 4, 5

4, 5

2A

2B

11

6, 7

1A, 2A

1B, 2B

12, 13, 14, 15, 16

6

8, 9, 10

3A

3B

17, 18, 19, 20

7, 8

11, 12, 15

4A

4B

20, 21, 22, 23

9, 10

13, 14, 15

5A

5B

*Note: All asterisked Questions, Exercises, and Problems relate to material contained in the appendix*to the chapter.

12-1

ASSIGNMENT CHARACTERISTICS TABLE
Problem Number Description 1A Prepare entries for formation of a partnership and a balance sheet. Journalize divisions of net income and prepare a partners’ capital statement. Prepare entries with a capital deficiency in liquidation of a partnership Journalize admission of a partner under different assumptions. Journalize withdrawal of a partner under different assumptions. Prepare entries for formation of a partnership and a balance sheet. Journalize divisions of net income and prepare a partners’ capital statement. Prepare entries and schedule of cash payments in liquidation of a partnership. Journalize admission of a partner under different assumptions. Journalize withdrawal of a partner under different assumptions. Difficulty Level Simple Time Allotted (min.) 20–30

2A

Moderate

30–40

3A

Moderate

30–40

*4A

Moderate

30–40

*5A

Moderate

30–40

1B

Simple

30–40

2B

Moderate

30–40

3B

Moderate

30–40

*4B

Moderate

30–40

*5B

Moderate

30–40

12-2

Correlation Chart between Bloom’s Taxonomy, Study Objectives and End-of-Chapter Exercises and Problems Knowledge Q12-1 Q12-2 Q12-3 Q12-5 BE12-1 BE12-2 E12-2 Q12-6 Q12-7 Q12-9 Q12-8 Q12-10 BE12-3 BE12-4 BE12-5 E12-6 E12-7 P12-1A Q12-15 Q12-16 BE12-6 E12-8 Q12-19 Q12-20 BE12-7 BE12-8 E12-11 Q12-20 Q12-21 BE12-9 BE12-10 E12-13 Exploring the Web Decision Making Across the Organization E12-9 E12-10 P12-3A P12-3B E12-12 E12-15 P12-4A P12-4B E12-14 E12-15 P12-5A P12-5B Q12-22 Q12-23 Communication Decision Making All About You Across the Organization Ethics Case P12-2A P12-1B P12-2B E12-4 E12-5 P12-2A P12-2B E12-3 P12-1A P12-1B Q12-4 Q12-12 E12-1 Comprehension Application Analysis Synthesis Evaluation

Study Objective

1. Identify the characteristics of the partnership form of business organization.

2. Explain the accounting entries for the formation of a partnership.

BLOOM’S TAXONOMY TABLE

3. Identify the bases for dividing net income or net loss.

4. Describe the form and content of partnership financial statements. Q12-12 Q12-13 Q12-14 Q12-17 Q12-18

Q12-11

12-3

5. Explain the effects of the entries to record the liquidation of a partnership.

*6. Explain the effects of the entries when a new partner is admitted.

*7. Describe the effects of the entries when a partner withdraws from the firm.

Broadening Your Perspective

ANSWERS TO QUESTIONS
1. (a) Association of individuals. A partnership is a voluntary association of two or more individuals based on as simple an act as a handshake. Preferably, however, the agreement should be in writing. A partnership is both a legal entity and an accounting entity, but it is not a taxable entity. (b) Limited life. A partnership does not have unlimited life. A partnership may be ended voluntarily or involuntarily. Thus, the life of a...
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