Page 145 - Business Principles and Management

C HAPTER 5 A SSESSMENT

19. A partner signs a partnership contract for television advertising
while the other two partners are on vacation. Upon returning,
the vacationing partners claim the partnership is not bound to the
contract because both of them disapprove of television advertising.
Is the partnership legally bound?

MAKE CONNECTIONS

20. Research Assume you are considering forming a small business in
your state. Search for information that will help you decide whether
to open a sole proprietorship or a partnership. Use your school or
public library to obtain information for writing a report on business
plans, legal advice, and general state assistance. Find information
from a government Web site, such as the Small Business Adminis-
tration, or from a magazine targeted to small businesses.
21. Math Alvares invested $80,000 and Navarro invested $60,000 in
their partnership. They share profits and losses in proportion to
their investments. How much should each receive of last year’s
$33,600 profit?
22. Technology Use computer spreadsheet software such as Excel to
analyze the following information. Assume the balance sheet of
Tran and Nizami’s partnership appeared as follows when they
closed the business:

Assets
Cash $18,000
Merchandise 40,000
Fixtures and Equipment 24,000
Land and Building 108,000
Total (Use formula here)
Claims Against Assets
Accounts Payable (Liabilities) $10,000
N. S. Tran, Capital 90,000
A. J. Nizami, Capital 90,000
Total (Use formula here)

When selling the assets, the partners sold the merchandise for
$32,000, the fixtures and equipment for $18,000, and the land and
building for $110,000. After paying their debts, what amount of the
remaining cash should each partner receive? Show the formulas you
used in your spreadsheet.
23. Speaking Choose a few sample businesses and develop an argument
for or against starting these businesses as a sole proprietorship or
a partnership. Outline the pros and cons of each business form.
Make a recommendation for each of the business examples you
have chosen. Compare your recommendations to those of other
students in the class.

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