Multiple Choice Quiz

Choose the best answer for each of the following questions and enter the identifying letter in the space provided.

1		In a limited liability partnership liquidation, the final cash distribution to partners is made in accordance with the:
			A)	Partners’ income-sharing ratio
			B)	Balances of partners’ capital accounts
			C)	Ratio of original investments by partners
			D)	Ratio of original investments less withdrawals by partners
2		The partners of Dawes & Epps LLP share net income and losses equally. Both Dawes and Epps are insolvent. At the time they decided to liquidate the limited liability partnership, its balance sheet included the following: cash, $1,000; other assets, $19,000; liabilities, $8,000; Dawes capital, $3,000; and Epps capital, $9,000. The other assets realized $12,000 and the liabilities were paid. The amount Epps received from the liquidation of the partnership was:
			A)	$6,500
			B)	$5,500
			C)	$5,000
			D)	$2,500
			E)	Some other amount
3		On January 1, 2002, the partners of Snell & Thomas LLP had capital account balances of $40,000 and $20,000, respectively. They shared net income and losses equally, and the partnership had a net income of $10,000 during 2002. On December 31, 2002, the partnership was liquidated. If, after realization of noncash assets and payment of liabilities, $30,000 remained for distribution to the partnership, Snell received:
			A)	$15,000
			B)	$20,000
			C)	$25,000
			D)	$30,000
			E)	Some other amount
4		After realization of a portion of the noncash assets of Saul, Tapp & Uris LLP, which is being liquidated, the capital account balances were Saul, $35,000; Tapp, $40,000; and Uris, $43,000. Cash of $42,000 and other assets with a carrying amount of $78,000 were on hand. Creditors’ claims totaled $2,000. The partners shared net income and losses equally. The cash that may be paid to Uris at this time is:
			A)	$43,000
			B)	$17,000
			C)	$14,000
			D)	$13,333
			E)	Some other amount
5		The partners of Lon & Mab LLP share net income and losses equally. After the realization of all noncash assets and payment of all liabilities, Lon had a capital account balance of $3,800, and Mab had a capital deficit of $3,800. Lon has personal assets of $30,000 and personal liabilities of $35,000; Mab has personal assets of $20,000 and personal liabilities of $18,000. The total amount that personal creditors of Lon should expect to receive after marshaling of assets is:
			A)	$35,000
			B)	$33,800
			C)	$32,000
			D)	$30,000
			E)	Some other amount
6		The partners of Cey, Doy & Ebb LLP had capital account balances of $40,000, $50,000, and $18,000, respectively, and an income-sharing ratio of 4:2:1, respectively. If Cey received only $8,000 on the liquidation of the partnership, the total amount received by all the partners on liquidation was:
			A)	$108,000
			B)	$56,000
			C)	$52,000
			D)	$24,000
			E)	Some other amount
7		Assume the same facts as in question 6, except that Cey received $26,000 on liquidation. How much cash did Ebb receive from the liquidation?
			A)	$26,000
			B)	$18,000
			C)	$14,500
			D)	$14,000
			E)	Some other amount
8		Clark Corporation invested $100,000 in a real estate corporate joint venture on January 2, 2002. During 2002, Clark received $9,500 from the joint venture, and its share of joint venture net income (after depreciation) was $12,000. The depreciation expense applicable to Clark’s share of net income was $4,000. Clark values its joint-venture investment in its December 31, 2002, balance sheet (under the equity method of accounting) at:
			A)	$116,000
			B)	$112,000
			C)	$102,500
			D)	$100,000
			E)	Some other amount
9		On January 2, 2002, Bur, Cam & Dee LLP was organized, with Cam and Dee each investing $100,000 cash and Bur investing $75,000 cash, with a commitment to invest an additional $25,000 cash on January 2, 2004. However, on December 31, 2002, the partners agreed to liquidate the insolvent limited liability partnership, which had liabilities totaling $410,000 on that date but assets at current fair value, including a $25,000 loan receivable from Bur, of only $200,000. Bur has a personal net worth of $750,000, but Cam and Dee are both insolvent. Because Bur is the partner responsible for the partnership’s insolvency, Bur’s maximum liability for unpaid partnership liabilities is:
			A)	$95,000
			B)	$185,000
			C)	$210,000
			D)	$235,000
			E)	Some other amount
10		Refer to the facts in question 9. If Bur were a limited partner, Bur’s maximum obligation for unpaid limited partnership liabilities would be:
			A)	$0
			B)	$25,000
			C)	$210,000
			D)	$235,000
			E)	Some other amount