PARTNERSHIP DISSOLUTION 1. A person may become a partner in a partnership by all o the ollo!in" metho#s e$cept% a.

p&rchasin" a partner's interest b. in(estin" in the partnership !ith a bon&s to the ol# partners c. ma)in" a loan to the partnership #. in(estin" in the partnership !ith a bon&s to the ne! partner *. I a ne! partner p&rchases his interest rom an ol# partner+ the only entry on the partnership boo)s is a cre#it to the p&rchaser's capital acco&nt !ith a #ebit to the a., cash acco&nt b., capital acco&nt o the sellin" partner c., bon&s acco&nt #, #ra!in" acco&nt -. .hich o the ollo!in" #oes not res&lt in the #issol&tion o a partnership/ a. a##ition o a ne! partner c., !ith#ra!al o a partner b. marria"e o a partner #., #eath o a partner 0. A ne! partner may be a#mitte# into a partnership by a. in(estin" in the partnership b. p&rchasin" pre erre# stoc) o the partnership c. p&rchasin" a partner's interest #. both a an# c 1. A partner may !ith#ra! his interest at all o the ollo!in"+ e$cept% a. less than boo) (al&e c., &t&re e$pecte# (al&e b. more than boo) (al&e #., boo) (al&e 2. I a partner !ith#ra!s in the mi##le o the acco&ntin" perio#+ &p#atin" the partnership boo)s is a., re3&ire# b., &nnecessary c., optional #., a&tomatic 4. The !ith#ra!al o a partner o his interest at more than boo) (al&e res&lts in a. a "ain or loss #epen#in" on the ta$ basis c., a "ain to remainin" partners b. a ne"ati(e "oo#!ill #., a bon&s rom remainin" partners 5. A partner retires rom the partnership an# the inal settlement is more than his capital interest. Un#er the bon&s metho#+ the e$cess a. is recor#e# as "oo#!ill c., re#&ces the capital balances o the remainin" partners b. is recor#e# as an e$pense #., increases the capital balances o remainin" partners 6. E& ie+ 7erbie an# R&bie are partners !ith capital balances o P*1+888+ P11+888 an# P18+888 respecti(ely. The partners share income an# losses e3&ally. 9or an in(estment o P*1+888 cash+ :erry is to be a#mitte# as a partner !ith a ; interest in capital an# income. <ase# on this in ormation+ the amo&nt o :erry's in(estment can best be =&sti ie# by !hich o the ollo!in"/ a. :erry !ill recei(e a bon&s rom the other partners &pon his a#mission to the partnership b. Assets o the partnership !ere o(er(al&e# imme#iately prior to :erry's in(estment c. The boo) (al&e o the partnership's net assets !as less than the air (al&e imme#iate prior to :erry's in(estment #. :erry is apparently brin"in" "oo#!ill into the partnership+ an# his capital acco&nt !ill be cre#ite# or the appropriate amo&nt

18. >am an# Pon" are partners !ith a capital ratio o -%1 an# a pro it an# loss ratio o *%1 respecti(ely. The bon&s metho# !as &se# to recor# 7a""i's a#mittance as a ne! partner. .hat ratio sho&l# be &se# to allocate+ to >am an# Pon"+ the e$cess o 7a""i's contrib&tion o(er the amo&nt cre#ite# to his capital acco&nt/ a. ne! relati(e capital ratio c., ol# capital ratio b. ne! relati(e pro it an# loss ratio #., ol# pro it an# loss ratio 11. 9i#el in(ests P128+888 in a partnership or a ; interest. Prior to his a#mission+ the partnership ha# t!o partners !ith capital balances o P168+888 each. I no re(al&ation o assets is to be #one &pon 9i#el's a#mission+ !hat amo&nt is cre#ite# to his capital acco&nt/ a., P168+888 b., P148+888 c., P1-1+888 #., P128+888 1*. :imo's interest in the partnership is P1-8+888. Raine b&ys :imo's interest or P1*8+888. Ho! m&ch is the capital balance o Raine's capital a ter the p&rchase/ a., P1*8+888 b., P118+888 c., P1-8+888 #., P108+888 1-. La+ Lo+ an# Li are partners !ith capital balances o P68+888+ P18+888 an# P28+888 respecti(ely. L& is a#mitte# into the partnership !ith a ; interest &pon payment o P58+888. I the ol# partners share pro its an# losses in the ratio *?1+ *?1+ an# 1?1+ then the capital acco&nt o Li a ter the a#mission o L& !ill sho! a balance o a., P18+888 b., P1*+188 c., P2*+888 #., P48+888 10. @aren contrib&tes P1*8+888 or a 1?- interest in a partnership. The total capital balances o the partners prior to the a#mission o @aren is P-28+888. I there !ill be an asset re(al&ation &pon the a#mission o @aren+ !hat amo&nt is cre#ite# to the capital acco&nt o @aren/ a., P128+888 b., P158+888 c., P1*8+888 #., P188+888 11. 7orris an# Assan#ra orm a partnership an# ha(e capital balances o P188+888 an# P*88+888 respecti(ely. I they a"ree to a#mit Esley into the partnership+ ho! m&ch !ill she ha(e to in(est to ha(e a ; interest/ a., P18+888 b., P41+888 c., P*88+888 #., P188+888 12. The pro it an# loss ratio an# capital balances o the partners are as ollo!s% :loria B28C, P088+888 Erap B-8C, P*88+888 Noli B18C, P188+888 7anny #esires to p&rchase ; capital an# pro it an# loss interest in the partnership o the three partners an# they a"ree to sell 7anny ; o their respecti(e capital an# pro it an# loss interest in e$chan"e or a total payment o P*88+888. I asset re(al&ation !ill be reco"niDe#+ !hat !o&l# be the capital balances o :loria+ Erap an# Noli a ter 7anny's a#mission/ a., P-88+888EP118+888EP41+888 c., P-51+888EP16*+188EP64+188 b., P-01+888EP14*+188EP5*+188 #., P028+888EP*-8+888EP118+888

14. Usin" the in ormation pro(i#e# in No. 12 an# ass&min" there !ill be no re(al&ation o asset+ !hat !o&l# be the capital balances o :loria+ Erap+ an# Noli a ter the a#mission o 7anny/ a.,P-88+888EP118+888EP41+888 c., P-51+888EP16*+188EP64+188 b.,P-01+888EP14*+188EP5*+188 #., P028+888EP*-8+888EP118+888 15. Ra y+ >ay an# Troy are partners !ith capital balances o P58+888+ P1*8+888 an# P128+888 respecti(ely. They share pro its an# losses e3&ally. >ay #eci#es to !ith#ra! rom the partnership an# he recei(es P128+888 in settlement o his interest. I the bon&s metho# is &se#+ !hat is the capital balance o Troy imme#iately a ter the retirement o >ay/ a., P128+888 b., P108+888 c., P*88+888 #., P158+888 16. Usin" the in ormation "i(en in No. 15 an# ass&min" bon&s metho# is once a"ain &se#+ !hat is the total partnership capital imme#iately a ter retirement o >ay/ a., P*08+888 b., P*58+888 c., P*88+888 #., P-*8+888 *8. Usin" the in ormation "i(en in No. 15 an# ass&min" asset re(al&ation metho# is &se#+ !hat is the capital balance o Ra y imme#iately a ter retirement o >ay/ a., P188+888 b., P58+888 c., P1*8+888 #., P108+888 *1. The total assets o the partnership !ill increase &pon a#mission o a ne! partner by p&rchase o interest The total assets o the partnership !ill increase &pon a#mission o a ne! partner by in(estment a., 9alse+ alse b., Tr&e+ alse c., 9alse+ tr&e #., Tr&e+ tr&e **. The a#mission o a ne! partner in an e$istin" partnership #issol(es the ol# partnership A partnership #issol&tion !ill al!ays lea# to a partnership li3&i#ation a., Tr&e+ 9alse b., 9alse+ Tr&e c., Tr&e+ Tr&e #., 9alse+ 9alse *-. The a"ree# capital can ne(er be less than the total contrib&te# capital Usin" bon&s metho#+ total contrib&te# capital is al!ays e3&al to total a"ree# capital a., Tr&e+ 9alse b., 9alse+ Tr&e c., Tr&e+ Tr&e #., 9alse+ 9alse *0. .hen a ne! partner enters an e$istin" partnership by p&rchasin" a partner's interest+ the cash pai# to the sellin" partner or the partnership interest is al!ays e3&al to the ne! partner's capital balance A#mission o a ne! partner by p&rchase o interest is a personal transaction bet!een the sellin" partner an# the b&yin" partner+ Hence+ any in#icate# "ain in the transaction is not reco"niDe# in the partnership boo)s a., Tr&e+ 9alse b., 9alse+ Tr&e c., Tr&e+ Tr&e #., 9alse+ 9alse