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Partnership dissolution

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EXERCISES – PARTNERSHIP DISSOLUTION 1 When a bonus is given to a new partner, the old partners’ capital accounts are credited. FALSE 2 When a new partner purchases an interest directly from a present partner, the assets of the partnership do not change. TRUE 3 No one becomes a member of the partnership without the consent of majority of the partners. FALSE 4 A bonus to a new partner results when the new partner’s capital credit is greater than the partner’s investment in the firm and the total agreed capital is equal to total actual contribution of the partners. TRUE 5 The withdrawal of a partner legally dissolves the partnership. TRUE 6 Withdrawal by a partner at less than book value results in a loss to the other partners, according to their profit and loss ratio. FALSE 7 When a new partner enters an existing partnership by purchasing a partner’s interest, the cash paid to the old partner for the partnership interest is always equal to the new partner’s capital balance. FALSE 8 A bonus paid to the old partners by a new partner increases the old partners’ capital accounts. TRUE 9 A bonus is normally shared by the existing partners in the profit-sharing ratio. TRUE 10 A bonus to the remaining partners will result when the cash paid to a retiring partner is more than the retiring partner’s capital balance. FALSE 11 Daisy wishes to purchase ¼ interest in the capital and profits in the partnership of Mickey, Minnie, and Donald. T ...
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