Table 12-9 Wally, Willie, and Watson Formed a Partnership Several Years Ago

question 4

Multiple Choice

Table 12-9
Wally, Willie, and Watson formed a partnership several years ago. Wally has decided to withdraw from the partnership. The current capital balances are: Wally, capital, $50,000; Willie, capital, $65,000; and Watson, capital, $100,000. Prior to the withdrawal of Wally, the partners agree to revalue some of the partnership assets. Inventory with a cost of $120,000 has a current market value of $150,000; land with a cost of $50,000 has a current market value of $125,000. Wally, Willie, and Watson share net income and losses in a 3:3:4 ratio. Willie and Watson will share net income in a 3:4 ratio.
-Refer to Table 12-9.Wally withdraws from the partnership and accepts $60,000 cash.Assuming the assets have been properly revalued,the entry to withdraw Wally from the partnership would include a debit to:

• A) Wally, Capital for $60,000
• B) Willie,Capital for $9,214
• C) Wally, Capital for $81,500
• D) Watson, Capital for $12,286

Apply the concept of proportions to solve problems related to business, finance, and taxation.

Calculate investments and profit sharing in partnerships according to given ratios.

Understand and apply concepts of currency conversion and exchange rates.

Apply ratio and proportion knowledge to calculate overhead allocations and refund amounts.

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Definitions:

Commodity Per Time

A measure of the rate at which goods or services are produced, delivered, or consumed over a specific period.

Other Commodity

General term for any marketable item produced to satisfy wants or needs, distinct from services.

Point C To D

A reference to moving or transitioning from one defined position or condition to another within a given context.

Unemployment Of Resources

refers to the situation where available factors of production such as labor, capital, and land are not being used in the production process.