1. In the AD partnership, Allen's capital is $140,000 and Daniel's is $40,000 and they share income in a 3:1 ratio, respectively. They decide to admit David to the partnership. Each of the following questions is independent of the others.

I. Refer to the information provided above. Allen and Daniel agree that some of the inventory is obsolete. The inventory account is decreased before David is admitted. David invests $40,000 for a one-fifth interest. What is the amount of inventory written down?A.$4,000B.$20,000C.$15,000D.$10,000

II. Refer to the information provided above. David directly purchases a one-fifth interest by paying Allen $34,000 and Daniel $10,000. The land account is increased before David is admitted. By what amount is the land account increased?A.$40,000B.$10,000C.$36,000D.$20,000

2. Shue, a partner in the Financial Brokers Partnership, has a 30 percent share in partnership profits and losses. Shue's capital account had a net decrease of $100,000 during 2008. During 2008, Shue withdrew $240,000 as withdrawals and contributed equipment valued at $50,000 to the partnership. What was the net income of the Financial Brokers Partnership for 2008?A.$633,334B.$466,666C.$300,000D.$190,000

3. Paul and Ray sell musical instruments through their partnership. To bring in additional funds and expertise, they decide to admit Janet to the partnership. Paul's capital is $400,000, Ray's capital is $200,000, and they share income in a ratio of 7:3, respectively.

RequiredRecord Janet's admission for each of the following independent situations:a) Janet invests $180,000 for a one-fourth interest. Goodwill is to be recorded.b) Paul and Ray agree that some of the inventory is obsolete. The inventory account is decreased before Janet is admitted. Janet invests $190,000 for a one-fourth interest.

4. In the JAW partnership, Jane's capital is $100,000, Anne's is $80,000, and William's is $75,000. They share income in a 3:2:1 ratio, respectively. William is retiring from the partnership.RequiredPrepare journal entries to record William's withdrawal according to each of the following independent assumptions:a. William is paid $80,000, and no goodwill is recorded.b. William is paid $85,000, and only his share of the goodwill is recorded.c. William is paid $78,000, and all implied goodwill is recorded.

5. The post-closing trial balances of two proprietorships on January 1, 2008 are presented below.

Free CompanyWill CompanyDr.Cr.Dr. Cr.

Cash$ 9,500$ 6,000Accounts Receivable 15,000 23,000Allowance for Doubtful Accounts$ 2,500$ 4,000Merchandise Inventory 28,000 17,000Equipment 50,000 30,000Accumulated depreciation-equipment 24,000 13,000Notes payable 25,000Accounts payable 20,000 37,000Free, Capital 31,000Will, Capital _____ _____ _____ 22,000$102,500$102,500 $76,000 $76,000

Free and Will decide to form a partnership, Free-Will Company, with the following agreed upon valuations for non-cash assets.

Free CompanyWill Company

Accounts receivable$15,000$23,000Allowance for doubtful accounts 3,500 5,000Merchandise inventory 32,000 21,000Equipment 28,000 18,000

All cash will be transferred to the partnership, and the partnership will assume all the liabilities of the two proprietorships. Further, it is agreed that Free will invest an additional $3,000 in cash, and Will will invest an additional $13,000 in cash.

Instructions:

a. Prepare separate journal entries to record the transfer of each proprietorships assets and liabilities to the partnership.b. Journalize the additional cash investment by each partner.