7. An intercompany sale took place whereby the bookvalue exceeded the transfer price of a depreciable asset. Whichstatement is true for the year following the sale?
a A worksheet entry is made with a debit to retained earningsfor an upstream transfer.
b A worksheet entry is made with a debit to retained earningsfor a downstream transfer.
c A worksheet entry is made with a debit to investment in thesubsidiary for a downstream transfer.
d A worksheet entry is made with a credit to retained earningsfor an upstream transfer.
e No worksheet entry is necessary.
8. A net asset balance sheet exposure exists, and the foreigncurrency depreciates. Which of the following statements istrue?
a There is no translation adjustment.
b There is a negative translation adjustment.
c There is a positive translation adjustment.
d There is a transaction loss.
e There is a transaction gain.
9. Cline, Watters, and Nettles formed a partnership on January1, 20X1, with investments of $100,000, $150,000, and $200,000,respectively. For division of income, they agreed to
(1) an interest of 10% of the beginning capital balance eachyear;
(2) an annual compensation of $10,000 to Watter; and
(3) sharing the remainder of the income or loss in a ratio of 20%for Cline and 40% each for Watters and Nettles.
Net income was $150,000 in 20X1 and $180,000 in 20X2. Each partnerwithdrew $1,000 for personal use every month during 20X1 and20X2.
What was Watters's capital balance at the end of 20X1?
a $150,000
b $160,000
c $165,000
d $201,000
e $213,000
