14 If a partner has a capital deficiency and does not have the personal resources toeliminate it,A) neither the creditors nor the other partners will have to absorb the capital deficiency.B) the other partners will have to absorb the capital deficiency on the basis of theirrespective income sharing ratios.C) the creditors will have to absorb the capital deficiency.D) the other partners will absorb the capital deficiency on the basis of their respectivecapital balances.15 Partners Y and Z receive a salary of $15,000 and $30,000,respectively, and share income and losses in a 2:1 ratio,respectively. If the partnership suffers a $15,000 net loss in2021, the entry to close the income or loss into their capitalaccounts is:A) Y, Capital$Z, Capital$Income SummaryB) Y, Capital.00$Z, CapitalIncome SummaryC) Y, CapitalZ, CapitalIncome Summary000,D) Y, CapitalZ, CapitalIncome SummaryE) None of the aboveD000000 PI$$$15,00030,00025,000Visma10,0005,00020,000$$$$$$45,00010,00015,00015,00010,00010,000

As per the guidelines, only one question is allowed to be solved so I am answering the first…

Answered: 14 If a partner has a capital…

Business

Accounting

14 If a partner has a capital deficiency and does not eliminate it,

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter20: Corporations And Partnerships

Section: Chapter Questions

Problem 21DQ

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Question

14 If a partner has a capital deficiency and does not have the personal resources to
eliminate it,
A) neither the creditors nor the other partners will have to absorb the capital deficiency.
B) the other partners will have to absorb the capital deficiency on the basis of their
respective income sharing ratios.
C) the creditors will have to absorb the capital deficiency.
D) the other partners will absorb the capital deficiency on the basis of their respective
capital balances.
15 Partners Y and Z receive a salary of $15,000 and $30,000,
respectively, and share income and losses in a 2:1 ratio,
respectively. If the partnership suffers a $15,000 net loss in
2021, the entry to close the income or loss into their capital
accounts is:
A) Y, Capital
$
Z, Capital
$
Income Summary
B) Y, Capital.00
$
Z, Capital
Income Summary
C) Y, Capital
Z, Capital
Income Summary
000,
D) Y, Capital
Z, Capital
Income Summary
E) None of the above
D000
000 PI
$
$
$
15,000
30,000
25,000
Visma
10,000
5,000
20,000
$
$
$
$
$
$
45,000
10,000
15,000
15,000
10,000
10,000

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Which of the following is true regarding capital deficiencies? O a Ob Oc Od The partners do not have a legally enforceable claim against the partner with the capital deficiency. If a partner with a capital deficiency is unable to pay the amount owed to the partnership, the partners with debit balances must absorb the loss. The loss is allocated based on the profit and loss ratios between the partners whether with credit or debit balances. if the partner with the capital deficiency pays the amount owed to the partnership, the deficiency is eliminated.
If a partner with a capital deficiency is unable to pay the amount owed to the partnership, the deficiency is allocated to the partners with credit balances * O equally. O on the basis of their income ratios. O on the basis of their capital balances. on the basis of their original investments.
8. In case the partnership makes profit, how will an industrial partner be given a share?A. what is just equitableB. equallyC. arbitrarilyD. proportion to capital contribution 9. Which of the following is not considered a legitimate expense of a partnership?A. Supplies used in the partnership’s officeB. Depreciation on assets contributed to the partnership by partnersC. Salaries for management hired to run the business D. Interest paid to partners based on their capital balances
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1. In a partnership liquidation the realization losses result in a debit balance in one partners’ capital account. If this partner fails to contribute personal assets to make up this deficit, how should the debit balance be handled by the partners? a. It should be written off against partnership profits like any other bad debt. b. It should be allocated to all the partners in their profit and loss ratio. c. It should be allocated to the remaining partners in their remaining P and L ratio. d. It should be set up as a receivable and turned over to a collection agency. 2. During liquidation, a partners’ capital account balance drops below zero. What should happen? a. The other partners should file a legal suit against the partner with the deficit balance. b. The partner with the highest capital balance should contribute sufficient assets to eliminate the deficit. c. The deficit balance…
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Any assets invested by a particular partner in a partnership ________. A. do not become a partnership asset but instead remain with the partner B. can be used only by the investing partner C. become the property of all the partners D. are the basis for all profit sharing
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