_____ _____ means that each partner can bind the partnership to contracts.

Mutual agency

In a(n) _____ innocent partners are protected from malpractice or negligence claims resulting from the acts of another partner.

LLP

A salary allowance is normally given to a partner because

the partner spends more time working for the business.

At the beginning of the year, Barry's capital was $100,000 and Tanya's was $60,000. Their partnership agreement provides: (1) annual salary allowances of $60,000 to Barry and $50,000 to Tanya, (2) annual interest allowances of 10% of a partner's beginning-year capital balance, and (3) the partners will share equally in any remaining balance of income or loss. Assume the partnership has net income of $120,000, the allocation should be:

$67,000 to Barry and $53,000 to Tanya.

A partnership financial statement is called:

Statement of Partners' Equity

Eric Christie and Johnnie Pitt organize a partnership. Their partnership agreement states that Christie will receive two-thirds of the partnership income or loss and Pitt will receive the remaining one-third. On January 2, the two partners agree to accept Peter Morgan as a partner with a 10% interest if Morgan invests $50,000 cash. At the time of Morgan's admission, the partnership`s accounting records show that Christie has recorded equity of $210,000 and Pitt has recorded equity of $60,000. The bonus that will be allocated to Christie as a result of this transaction (rounded to the nearest dollar) is:

$12,000.

D. Shahi and K. Vaughn organize a partnership. Their partnership agreement states that Shahi will receive 40% of the partnership income or loss and Vaughn will receive the remaining 60%. On January 2, the two partners agree to accept Paul Williams as a partner with a 40% interest if Williams invests $80,000 cash. At the time of Williams' admission, the partnership`s accounting records show that Shahi has recorded equity of $80,000 and Vaughn has recorded equity of $90,000. The old partners will contribute to the bonus paid to Williams as follows:

$8,000 by Shahi and $12,000 by Vaughn

Partner return on equity is computed as

Partner net income divided by average partner equity Correct