Question

Following is a series of independent cases. In each situation, indicate the cash distribution to be...

Following is a series of independent cases. In each situation, indicate the cash distribution to be made to partners at the end of the liquidation process. Unless otherwise stated, assume that all solvent partners will reimburse the partnership for their deficit capital balances.

Part A

The Buarque, Monte, and Vinicius partnership reports the following accounts. Vinicius is personally insolvent and can contribute only an additional $22,000 to the partnership.

Cash $ 143,000
Liabilities 48,000
Monte, loan 46,000
Buarque, capital (50% of profits and losses) 24,000
Monte, capital (25%) 53,000
Vinicius, capital (25%) (28,000 ) (deficit)

Part B

Drawdy, Langston, and Pearl operate a local accounting firm as a partnership. After working together for several years, they have decided to liquidate the partnership’s property. The partners have prepared the following balance sheet:

Cash $ 33,000 Liabilities $ 41,500
Drawdy, loan 18,000 Langston, loan 26,000
Noncash assets 176,000 Drawdy, capital (40%) 78,000
Langston, capital (30%) 63,000
Pearl, capital (30%) 18,500
Total assets $ 227,000 Total liabilities and capital $ 227,000

The firm sells the noncash assets for $133,000; it will use $28,000 of this amount to pay liquidation expenses. All three of these partners are personally insolvent.

Indicate the cash distribution to be made to partners at the end of the liquidation process. Unless otherwise stated, assume that all solvent partners will reimburse the partnership for their deficit capital balances.
Buarque, Capital Monte, Loan and Capital Vinicius, Capital
Beginning balances
Contribution by Vinicius
Capital balances
Elimination of Vinicius's deficit
Final distribution

Indicate the cash distribution to be made to partners at the end of the liquidation process. Unless otherwise stated, assume that all solvent partners will reimburse the partnership for their deficit capital balances. (Do not round intermediate calculations. Round the final answer to nearest dollar amounts.)
Drawdy, Loan and Capital Langston, Loan and Capital Pearl, Capital
Beginning balances
Loss on disposal
Liquidation expenses
Capital balances
Allocation of Pearl's deficit
Final distribution
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Part A:

Buarque, Capital Monte, Loan and Capital Vinicus, Capital
Beginning balances 24000 99000 -28000
Contribution by Vinicus 0 0 22000
Capital balances 24000 99000 -6000
Elimination of Vinicus's deficit -4000 -2000 6000
Final distribution 20000 97000 0

The deficit in Vinicus's capital account is borne by Buarque and Monte in their profit sharing ratio of 50 : 25.

Part B:

Drawdy, Loan and Capital Langston, Loan and Capital Pearl, Capital
Beginning balances 60000 89000 18500
Loss on disposal -17200 -12900 -12900
Liquidation expenses -11200 -8400 -8400
Capital balances 31600 67700 -2800
Allocation of Pearl's deficit -1600 -1200 2800
Final distribution 30000 66500 0

The deficit in Pearl's capital account is borne by Drawdy and Langston in their profit sharing ratio of 40 : 30.

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
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...
Hardin, Sutton, and Williams have operated a local business as a partnership for several years. All...
Hardin, Sutton, and Williams have operated a local business as a partnership for several years. All profits and losses have been allocated in a 3:2:1 ratio, respectively. Recently, Williams has undergone personal financial problems, and is insolvent. To satisfy Williams' creditors, the partnership has decided to liquidate. The following balance sheet has been produced: Cash $ 10,000 Liabilities $ 80,000 Noncash assets 227,000 Hardin, capital 96,000 Sutton, capital 45,000 Williams, capital 16,000 Total assets $ 237,000 Total liabilities and capital...
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...
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...
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....
Distribution of Cash Upon Liquidation Hewitt and Patel are partners, sharing gains and losses equally. They...
Distribution of Cash Upon Liquidation Hewitt and Patel are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $42,000 and $28,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $53,000. a. What is the amount of a gain or loss on realization? $ b. How should the gain or loss be divided between Hewitt and Patel? Hewitt Patel c. How...
The partnership of Winn, Xie, Yang, and Zed has the following balance sheet: Cash $ 43,000...
The partnership of Winn, Xie, Yang, and Zed has the following balance sheet: Cash $ 43,000 Liabilities $ 66,000 Other assets 282,000 Winn, capital (50% of profits and losses) 73,000 Xie, capital (30%) 90,000 Yang, capital (10%) 53,000 Zed, capital (10%) 43,000 Zed is personally insolvent, and one of his creditors is considering suing the partnership for the $18,000 that is currently owed. The creditor realizes that this litigation could result in partnership liquidation and does not wish to force...
Sedgwick Company at December 31 has cash $24,000, noncash assets $105,000, liabilities $50,200, and the following...
Sedgwick Company at December 31 has cash $24,000, noncash assets $105,000, liabilities $50,200, and the following capital balance : Floyd $43,200 and Dewitt $35,600. The firm is liquidated, and $117,000 in cash is received for the noncash assets. Floyd and Dewitt income rations are 60% and 40% respectively. Sedgwick Company Schedule of cash payment Items cash + Noncash assets= liabilities + Floyd, Capital+ Dewitt, Capital balance before liquidation $24,000 $105,000 $50,200 $43,200 $35,600 sales of noncash asssets and allocation gain...
The Eaton, Kraft and Thornton partnership began the process of liquidation with the following balance sheet:...
The Eaton, Kraft and Thornton partnership began the process of liquidation with the following balance sheet: cash 20,000 liabilities 200,000 noncash assets 430,000 eaton capital, 50,000 kraft, capital 80,000 thorton, capital 120,000 total 450,000 450,000 Eaton, Kraft and Thornton share profits and losses in a ratio of 2:3:5. Non-cash assets are sold for $200,000. Liquidation expenses are expected to be $12,000. Prepare a schedule using the format provided below to show the liquidation of the partnership and final distribution to...
Distribution of Cash Upon Liquidation Pryor and Lester are partners, sharing gains and losses equally. They...
Distribution of Cash Upon Liquidation Pryor and Lester are partners, sharing gains and losses equally. They decide to terminate their partnership. Prior to realization, their capital balances are $18,000 and $12,000, respectively. After all noncash assets are sold and all liabilities are paid, there is a cash balance of $23,000. a. What is the amount of a gain or loss on realization? Gain or Loss Amount $ b. How should the gain or loss be divided between Pryor and Lester?...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT