ETGHICS CASE Kathy Lentz, Rob Snyder, and Tom Rohm were all general partners in a consulting business. Each partner owned one-third of the business. The partnership agreement stated that all three partners must approve vouchers for payments in amounts exceeding $5,000. While Tom was on vacation, Kathy and Rob decided to purchase a new computer system costing $6,800. A voucher was prepared and Rob signed both his and Tom’s name. Kathy signed her name and gave the voucher to the accounts payable clerk who wrote the check for $6,800. 1. Why would a partnership agreement specify that all purchases over a certain amount be approved by all partners? Are there any circumstances that would warrant deviation from this policy? 2. What are the disadvantages of the partnership form of business ownership? 3. Write a short memo from Tom Rohm to Kathy Lentz and Rob Snyder expressing disapproval of the situation. 4. In groups of three or four, discuss some of the possible outcomes of this situation.

BuyFind

College Accounting, Chapters 1-27 ...

22nd Edition
James A. Heintz + 1 other
Publisher: Cengage Learning
ISBN: 9781305666160
BuyFind

College Accounting, Chapters 1-27 ...

22nd Edition
James A. Heintz + 1 other
Publisher: Cengage Learning
ISBN: 9781305666160

Solutions

Chapter 19, Problem 1EC
Textbook Problem

ETGHICS CASE

Kathy Lentz, Rob Snyder, and Tom Rohm were all general partners in a consulting business. Each partner owned one-third of the business. The partnership agreement stated that all three partners must approve vouchers for payments in amounts exceeding $5,000. While Tom was on vacation, Kathy and Rob decided to purchase a new computer system costing $6,800. A voucher was prepared and Rob signed both his and Tom’s name. Kathy signed her name and gave the voucher to the accounts payable clerk who wrote the check for $6,800.

1. Why would a partnership agreement specify that all purchases over a certain amount be approved by all partners? Are there any circumstances that would warrant deviation from this policy?

2. What are the disadvantages of the partnership form of business ownership?

3. Write a short memo from Tom Rohm to Kathy Lentz and Rob Snyder expressing disapproval of the situation.

4. In groups of three or four, discuss some of the possible outcomes of this situation.

Expert Solution

Want to see the full answer?

Check out a sample textbook solution.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times vary by subject and question complexity. Median response time is 34 minutes and may be longer for new subjects.

Chapter 19 Solutions

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Ch. 19 - On January 1, 20-1, Paul Dimmitt and Mike Stiglitz...Ch. 19 - Dimmitt and Stiglitz are to receive salary...Ch. 19 - Dimmitt and Stiglitz are to receive salary...Ch. 19 - On January 1, 20-5, the capital balances of...Ch. 19 - On December 31, 20-8, the partners decided to...Ch. 19 - Identify 11 essential provisions of a partnership...Ch. 19 - Identify three advantages of a partnership as...Ch. 19 - Identify four disadvantages of a partnership form...Ch. 19 - When two sole proprietors decide to combine their...Ch. 19 - In the absence of any agreement between the...Ch. 19 - What factors generally are considered in...Ch. 19 - Identify three ways in which a partnership may be...Ch. 19 - When a new partner who has been the sole owner of...Ch. 19 - Describe the four accounting entries for the...Ch. 19 - PARTNER SHIP OPENING ENTRIES Patty McShane and...Ch. 19 - ENTRIES FOR ALLOCATION OF NET INCOME Danny...Ch. 19 - PARTI AL FINANCIAL STATEMENTS Ronica Kluge and Sam...Ch. 19 - ADMITTING NEW PARTNERS Jeff Bowman and Kristi...Ch. 19 - ENTRIES: PARTNERSHIP LIQUIDATION On liquidation of...Ch. 19 - SERIES A PROBLEMS PARTNERSHIP OPENING ENTRIES On...Ch. 19 - PREPARING PARTI AL FINANCIAL STATEMENTS AND...Ch. 19 - ENTRIES FOR DISSOLUTION OF PARTNERSHIP The Kelly...Ch. 19 - STATEMENT OF PARTNERSHIP LIQUIDATION WITH GAIN...Ch. 19 - STATEMENT OF PARTNER SHIP LIQUIDATION WITH LOSS...Ch. 19 - PARTNER SHIP OPENING ENTRIES Sharon Usher and...Ch. 19 - ENTRIES FOR ALLOCATION OF NET INCOME John Clark...Ch. 19 - PARTI AL FINANCIAL STATEMENTS Randy Nolan and Jill...Ch. 19 - ADMITTING NEW PARTNER S Maria Rhodes and Craig...Ch. 19 - ENTRIES: PARTNERSHIP LIQUIDATION On liquidation of...Ch. 19 - SERIES B PROBLEMS PARTNERSHIP OPENING ENTRIES On...Ch. 19 - PREPARING PARTI AL FINANCIAL STATEMENTS AND...Ch. 19 - ENTRIES FOR DISSOLUTION OF PARTNERSHIP Cummings...Ch. 19 - STATEMENT OF PARTNERSHIP LIQUIDATION WITH GAIN...Ch. 19 - STATEMENT OF PARTNER SHIP LIQUIDATION WITH LOSS...Ch. 19 - MANAGING YOUR WRITING A friend, Joan Mellencamp,...Ch. 19 - ETGHICS CASE Kathy Lentz, Rob Snyder, and Tom Rohm...Ch. 19 - Jim Bond, a plumber, has been working for Flemings...Ch. 19 - CHALLENGE PROBLEM This problem challenges you to...Ch. 19 - Siblings Jordan and Morgan Hartley are partners in...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Define net exports and net capital outflow. Explain how they are related.

Brief Principles of Macroeconomics (MindTap Course List)

How can report writers decide what type of graphic to use in a report?

Essentials of Business Communication (MindTap Course List)

FUTURE VALUE OF AN ANNUITY Kind the future values of the following ordinary annuities: a. FV of 400 paid each 6...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

What is tactical decision making?

Cornerstones of Cost Management (Cornerstones Series)