1. Cob, Inc., a partner in TLC Partnership, assigns its partnership interest to Bean, who is not made a partner. After the assignment, Bean asserts the rights to:
I Participate in the management of TLC
II Cob’s share of TLC’s partnership profits
Bean is correct as to which of these rights?
(a) I only
(b) II only
(c) I and II
(d) Neither I nor II
2. When property other than cash is invested in a partnership, at what amount should the noncash property be credited to the contributing partner’s capital account?
(a) Fair value at the date of contribution
(b) Contributing partner’s original cost
(c) Assessed valuation for property tax purposes
(d) Contributing partner’s tax basis
3. Arthur Plack, a partner in the Brite Partnership, has a 30% participation in partnership profits and losses. Plack’s capital account had a net decrease of $60,000 during the calendar year 2011. During 2011, Plack withdrew $130,000 (charged against his capital account) and contributed property valued at $25,000 to the partnership. What was the net income of the Brite Partnership for 2011?
(a) $150,000
(b) $233,333
(c) $350,000
(d) $550,000
4. Fox, Greg, and Howe are partners with average capital balances during 2011 of $120,000, $60,000, and $40,000, respectively. Partners receive 10% interest on their average capital balances. After deducting salaries of $30,000 to Fox and $20,000 to Howe, the residual profit or loss is divided equally. In 2011 the partnership sustained a $33,000 loss before interest and salaries to partners. By what amount should Fox’s capital account change?
(a) $7,000 increase
(b) $11,000 decrease
(c) $35,000 decrease
(d) $42,000 increase
5. Beck, an active partner in the Beck and Cris partnership, receives an annual bonus of 25% of partnership net income after deducting the bonus. For the year ended December 31, 2011, partnership net income before the bonus amounted to $300,000. Beck’s 2011 bonus should be:
(a) $56,250
(b) $60,000
(c) $62,500
(d) $75,000