Accounting Answers

11) The average capital balances of partners Bridget and Emily are $3,000 and $6,000, respectively. Both women work at the business full-time. The business earned a net income of $12,000 for the period. The partners have agreed to share earnings based on the percentage of original investment. Bridget’s share of the net income is
A. $4,000.
B. $6,000.
C. $8,000.
D. indeterminable.

12) Which method of allocating profits and losses is based on a percentage of initial investment by the partners?
A. Salary allowance
B. Salary expense
C. Profit and loss ratio
D. Interest allowance

14) A general partner is
A. personally liable for all of the debts of the partnership.
B. liable for only the amount of his investment.
C. liable for the amount of taxes paid each period.
D. None of the above

7) When a partnership is terminated, the assets are turned into cash, and obligations are paid. This process is called
A. dissolution.
B. termination.
C. realization.
D. None of the above

9)The accounting procedures for sole proprietorships are the same as for partnerships except
A. that the asset section includes more than one cash account.
B. for the liability section.
C. for the revenue section.
D. that the capital section is now divided per the number of partners.

10) Which of the following is an incorrect step in the process of partnership liquidation?
A. Paying any liabilities
B. Closing all accounts payable
C. Allocating gains and losses to partners
D. Selling the assets

3) Laura’s investment in a new partnership includes $1,000 in cash and $5,000 of equipment. The new partnership is assuming $500 of Laura’s accounts payable. The partnership entry should be which of the following?
A. Debit Laura’s Capital $5,500; debit Accounts Payable $500; credit Cash $1,000; credit Equipment $5,000
B. Debit Cash $1,000; debit Equipment $5,000; credit Laura’s Capital $6,000
C. Debit Cash $1,000; debit Equipment $5,000; credit Accounts Payable $500; credit Laura’s Capital $5,500
D. Debit Laura’s Investment $5,500; credit Capital $5,500

4) A statement of partner’s equity is the same as a statement of owner’s equity except that
A. there’s a capital account for all partners.
B. net income is assigned to one partner.
C. no additional investments by partners are shown on the statement.
D. There’s no difference in the statements.

Bank ABC has rented a space from zebra trader to open up their branch. Following
transactions took place between the two parties: -
– On January 1st 2013, Bank ABC and Zebra Traders signed an agreement under which the
bank would rent the space at a charge of Rs.240, 000 per annum.
– On January 3rd, the bank issued a cheque of Rs.240, 000 in favor of Zebra traders.
– Assume that both parties adjust their accounts on a monthly basis.
A. Record the above transactions in books of Bank ABC and Zebra Traders.
B. What entry will be recorded in the books of Bank on March 31, 2013?
C. What entry will be recorded in the books of Zebra on March 31, 2013?

Rubber Co manufactures tennis balls. On 1 January 2010, Rubber Co purchased a

new machine for $1.1m (inclusive of GST) which it used to produce the tin cans in

which its tennis balls were placed for sale to retailers. At the time of acquiring the

machine , Rubber Co estimated that the machine would have an effective life of 10

years before it needed to be replaced. Subsequently, on 1 January 2014, as a result

of new technology, a better quality machine became available and Rubber Co

decided to sell the original machine for $330,000 (inclusive of GST) and purchase a

new machine for $2.2m (inclusive of GST).

Requirement:

What are the tax consequences of these arrangements under Div 40ITAA97?

You plan to retire in 40 years and want to have $10,000,000 on the day you retire. If you plan to invest $64,615 at the end of each of the next forty years, approximately what rate of return must you earn in order to meet your objective? Show your work.

The management of XYZ Company is considering the purchase of a $25,000 machine that would reduce operating
costs by $4,000 per year. At the end of the machine’s 10‐year useful life, it will have a zero salvage value. The
company requires a 14% on all investment projects.

Use the following data
a) Profit after tax 45,000
b) Depreciation 75,000
c) Tax Paid 25,000
d) Interest paid 5,000
e) Dividend paid 10,000
f) Cash Received from sale of Building 40,000
g) Sale of Preferrence Share 35,000
h) Repurchase of Ordinary Shares 30,000
i) Purchase of Machinery 20,000
j) Issuance of Bond 50,000
k) Debt Retired through issuance of ordinary shares 45,000
l) Paid off long term bank borrowings 15,000
l) Profit on sale of building 20,000
Requirements:
1. Calculate Cash Flow from operating activities
2. Calculate Cash Flow from Investing activities
3. Calculate Cash Flow from financing activities

From the following data of ABC Enterprises, prepare statement of cash flows and balance sheet and income statement through cash basis of accounting and accrual basis of accounting and discuss the result - Invested $ 700 Equity - Purchased plain T-Shirts for $ 5 each - Fixed Screen cost $ 100 - Variable Print cost $ 0.75 per T-Shirt - Sold 25 T-Shirts at $ 10 each on cash - Sold 25 T-Shirts at $ 10 each on credit

From the following data of ABC Enterprises, prepare statement of cash flows and balance sheet and income statement through cash basis of accounting and accrual basis of accounting and discuss the result - Invested $ 700 Equity - Purchased plain T-Shirts for $ 5 each - Fixed Screen cost $ 100 - Variable Print cost $ 0.75 per T-Shirt - Sold 25 T-Shirts at $ 10 each on cash - Sold 25 T-Shirts at $ 10 each on credit