Question

Liver, Patrick & Quincy LLP, is beginning liquidation. It has no cash, total liabilities of $60,000,...

Liver, Patrick & Quincy LLP, is beginning liquidation. It has no cash, total liabilities of $60,000, including a $10,000 loan payable to Patrick, and equal partners' capital account balances of $40,000. The income-sharing ratio is 5:1:4, respectively. If a portion of the noncash assets with a carrying amount of $140,000 realizes $120,000, the cash payment that Patrick receives is:
A) $20,000
B) $44,000
C) $53,000
D) Some other amount

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Option B $44,000 is the correct answer

Working:

Particulars Amount
a Patric's Capital $        40,000
b Loan $        10,000
c Loss on realization $          2,000 (140000-120000)*1/10
d Share of non-cash assets $          4,000 {[(40000*3)+60000] - 140000 }*1/10
e=a+b-c-d Cash payment $        44,000

Overall payment to Patric against his capital = $40,000-$2000-$40000 = $34,000

Payment against his loan = $10,000

Total cash payment = $44,000

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
The balance sheet for the Delphine, Xavier, and Olivier partnership follows: Cash $ 60,000 Liabilities $...
The balance sheet for the Delphine, Xavier, and Olivier partnership follows: Cash $ 60,000 Liabilities $ 40,000 Noncash assets 100,000 Delphine, capital 60,000 Xavier, capital 40,000 Olivier, capital 20,000 Total assets $ 160,000 Total liabilities and capital $ 160,000 Delphine, Xavier, and Olivier share profits and losses in the ratio of 4:4:2, respectively. The partners have agreed to terminate the business and estimate that $12,000 in liquidation expenses will be incurred. What is the amount of cash that safely can...
Immediately prior to the process of liquidation on December 31, 2014 partners Micco, Niccum, and Orwell...
Immediately prior to the process of liquidation on December 31, 2014 partners Micco, Niccum, and Orwell of MNO Partnership have capital balances of $70,000, $20,000, and $40,000, respectively. There is a cash balance of $20,000, noncash assets total $170,000, and liabilities total $60,000. The partners share net income and losses in the ratio of 3:2:1. (Different than lecture.) If there is a defeciency assume the partner pays it. Sold non-cash assets for $80,000. 1. Prepare the Statement of Partnership Liquidation...
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...
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?...
ABC Corporation currently has $20,000 in cash, $30,000 in noncash assets, and liabilities of $35,000. The...
ABC Corporation currently has $20,000 in cash, $30,000 in noncash assets, and liabilities of $35,000. The partners, Adrian, Batch, and Crenshaw, had capital balances of $5,000, $8,000, and $2,000, respectively. The partners share a profit and loss ratio of 1:1:3. The noncash assets were sold for $60,000. Complete the liquidation chart below. Statement of Partnership Liquidation Cash Noncash Assets Liabilities Capital Adrian Batch Crenshaw Balances before realization Blank 1 Blank 2 Blank 3 Blank 4 Blank 5 Blank 6 Sale...
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%...
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,...
ABC Company has three partners whose capital balances at the beginning of the year are :...
ABC Company has three partners whose capital balances at the beginning of the year are : Anna $200,000; Barbara $60,000; Clint $140,000. Partners agree to divide income and loss as follows: a. Salary allowance of $40,000 to Anna, $30,000 to Barbara, and $20,000 to Clint; b. Interest allowance of 10% on beginning-of-year capital balances; and c. Any remaining balance to be divided equally. Partnership net income is $160,000. The amount of partnership net income to be allocated to each partner...
6) The Hylands Hotels are liquidating their partnership. Before selling the assets and paying liabilities, the...
6) The Hylands Hotels are liquidating their partnership. Before selling the assets and paying liabilities, the capital balances for the partners are: Martha $45,000; Nathan $36,000 and Orin $26,000. The profit and loss sharing ratio has been 2:2:1 for Martha, Nathan and Orin respectively. The partnership has cash $68,000, $75,000 noncash assets and $36,000Accounts payable. 6a. Assume the partnership sells the non-cash assets and received $84,000 in cash. 6b. Assume the partnership sells the noncash assets and received $35,000. Instructions...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT