Question

The CRT partnership has decided to terminate operations and to liquidate the partnership assets. There are...

The CRT partnership has decided to terminate operations and to liquidate the partnership assets. There are no partner loans, and all partners have positive capital balances. Gains and losses on liquidation and cash distributions to partners should be allocated as follows:

Gains and Losses Cash Distributions
A) In profit and loss ratio Based on capital balances
B) Based on capital balances In profit and loss ratio
C) In profit and loss ratio In profit and loss ratio
D) Based on capital balances Based on capital balances
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Gains and Losses to be allocated on the basis of profit and loss ratio because the profit and loss ratio indicates the percentage of total profit that needs to be allocated to each partner.

Cash Distribution - It means the remaining cash i.e. the asset left in partnership, that is to be distributed based on capital balances, because it indicates the amount of money invested in firm by each partner and that needs to be repaid at the time of liquidation (if the firm has sufficient funds).

Hence, Option A is correct.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Liquidation—Cash distribution computation, safe payments schedule Fed, Ela, and Luc have decided to liquidate their partnership....
Liquidation—Cash distribution computation, safe payments schedule Fed, Ela, and Luc have decided to liquidate their partnership. Account balances on January 1, 2016, are as follows: Cash 160000 Accounts Payable 60000 Other Assets 180000 Fed Capital (30%) 110000 340000 Ela Capital (30%) 50000 Luc Capital (40%) 120000 340000 The partners agree to keep a $30,000 contingency fund and to distribute available cash immediately. Required: Determine the amount of cash that should be paid to each partner
The GAP Partnership has decided to liquidate at December 31, 2019. The capital and loan balances...
The GAP Partnership has decided to liquidate at December 31, 2019. The capital and loan balances of the partners at December 31, 2019 are provided below: Partner Capital Balances Loan Balances Profit/Loss Sharing % George $210,000 $40,000 account payable 50% Andrew 140,000 20,000 account receivable 20% Peter 90,000 30,000 account payable 30% · Outside liabilities are $50,000. Liquidation expenses are estimated to be $12,000. The Loss Absorption Potential (LAP) for the partners are as follows: Select one: a. George $340,000,...
The GAP Partnership has decided to liquidate at December 31, 2019. The capital and loan balances...
The GAP Partnership has decided to liquidate at December 31, 2019. The capital and loan balances of the partners at December 31, 2019 are provided below: Partner Capital Balances Loan Balances Profit/Loss Sharing % George $210,000 $40,000 account payable 50% Andrew 140,000 20,000 account receivable 20% Peter 90,000 30,000 account payable 30% · Outside liabilities are $50,000. Liquidation expenses are estimated to be $12,000. The Loss Absorption Potential (LAP) for the partners are as follows: Select one: a. George $340,000,...
The partnership of Butler, Osman, and Ward was formed several years as a local tax preparation...
The partnership of Butler, Osman, and Ward was formed several years as a local tax preparation firm. Two partners have reached retirement age and the partners have decided to terminate operations and liquidate the business. Liquidation expenses of $38,000 are expected. The partnership balance sheet at the start of liquidation is as follows: Cash $ 34,000 Liabilities $ 174,000 Accounts receivable 64,000 Butler, loan 34,000 Office equipment (net) 54,000 Butler, capital (25%) 70,000 Building (net) 130,000 Osman, capital (25%) 34,000...
The partnership of Butler, Osman, and Ward was formed several years as a local tax preparation...
The partnership of Butler, Osman, and Ward was formed several years as a local tax preparation firm. Two partners have reached retirement age and the partners have decided to terminate operations and liquidate the business. Liquidation expenses of $35,000 are expected. The partnership balance sheet at the start of liquidation is as follows: Cash $ 31,000 Liabilities $ 171,000 Accounts receivable 61,000 Butler, loan 31,000 Office equipment (net) 51,000 Butler, capital (25%) 55,000 Building (net) 115,000 Osman, capital (25%) 31,000...
Liquidation schedule—positive capital accounts The ABC partnership reports the following condensed balance sheet: Cash $200,000 Liabilities...
Liquidation schedule—positive capital accounts The ABC partnership reports the following condensed balance sheet: Cash $200,000 Liabilities $300,000 Noncash assets 600,00 Partner A, capital 125,000 Partner B, capital 125,000 Partner C, capital 250,000 Total assets $800,000 Total liabilities and partner capital $800,000 The partners wish to liquidate the partnership. The noncash assets are sold for $450,000 with the loss distributed to the partners in the ratio of 30%/30%/40% to partner A, B, and C, respectively. The liabilities are paid in full....
The ABC partnership reports the following condensed balance sheet: Cash $ 480,000 Liabilities $2,000,000 Noncash assets...
The ABC partnership reports the following condensed balance sheet: Cash $ 480,000 Liabilities $2,000,000 Noncash assets 3,160,000 Partner A, capital 290,000 Partner B, capital 1,100,000 Partner C, capital 250,000 Total assets $3,640,000 Total liabilities and partner capital $3,640,000 The partners wish to liquidate the partnership. The noncash assets are sold for $2,300,000 with the loss distributed to the partners in the ratio of 30%/30%/40% to partner A, B, and C, respectively. The liabilities are paid in full. Assume that any...
On November 1, 2016, the firm of Sails, Welch, and Greenberg decided to liquidate their partnership....
On November 1, 2016, the firm of Sails, Welch, and Greenberg decided to liquidate their partnership. The partners have capital balances of $57,800, $72,050, and $10,390, respectively. The cash balance is $32,470, the book values of noncash assets total $127,810, and liabilities total $20,040. The partners share income and losses in the ratio of 2:2:1. Required: 1. Prepare a statement of partnership liquidation, covering the period November 1–30, 2016, for each of the following independent assumptions: a. All of the...
Liquidation schedule—one negative capital account with no capital contribution The ABC partnership reports the following condensed...
Liquidation schedule—one negative capital account with no capital contribution The ABC partnership reports the following condensed balance sheet: Cash $580,000 Liabilities $800,000 Noncash assets 1,200,000 Partner A, capital 450,000 Partner B, capital 450,000 Partner C, capital 80,000 Total assets $1,780,000 Total liabilities and partner capital $1,780,000 The partners wish to liquidate the partnership. The noncash assets are sold for $900,000 with the loss distributed to the partners in the ratio of 30%/30%/40% to partner A, B, and C, respectively. The...
Alex and Bess have been in partnership for many years. The partners, who share profits and...
Alex and Bess have been in partnership for many years. The partners, who share profits and losses on a 60:40 basis, respectively, wish to retire and have agreed to liquidate the business. Liquidation expenses are estimated to be $9,500. At the date the partnership ceases operations, the balance sheet is as follows: Cash $ 71,000 Liabilities $ 61,000 Noncash assets 300,000 Alex, capital 180,000 Bess, capital 130,000 Total assets $ 371,000 Total liabilities and capital $ 371,000 Part A: Prepare...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT