1. Next to the following list of eight characteristics of business organizations, enter a brief description of how each characteristic applies to general partnerships.
|
Characteristic |
Application to General Partnerships |
|
1 |
Ease of formation |
|
2 |
Transferability of ownership |
|
3 |
Ability to raise large amounts of capital |
|
4 |
Life |
|
5 |
Owners’ liability |
|
6 |
Legal status |
|
7 |
Tax status of income |
|
8 |
Owners’ authority |
2. Anita Kroll and Aaron Rogers organize a partnership on January 1. Kroll’s initial net investment is $60,000, consisting of cash ($14,000), equipment ($66,000), and a note payable reflecting a bank loan for the new business ($20,000). Rogers’s initial investment is cash of $25,000. These amounts are the values agreed on by both partners. Prepare journal entries to record (1) Kroll’s investment and (2) Rogers’s investment.