Question
In: Accounting
The following condensed balance sheet is for the partnership of Miller, Tyson, and Watson, who share...
The following condensed balance sheet is for the partnership of Miller, Tyson, and Watson, who share profits and losses in the ratio of 6:2:2, respectively:
| Cash | $ | 41,000 | Liabilities | $ | 29,000 | |||
| Other assets | 101,000 | Miller, capital | 51,000 | |||||
| Tyson, capital | 51,000 | |||||||
| Watson, capital | 11,000 | |||||||
| Total assets | $ | 142,000 | Total liabilities and capital | $ | 142,000 | |||
a. Assuming no liquidation expenses, calculate the safe payments that can be made to partners at this point in time.
b. For how much money must the other assets be sold so that each partner receives some amount of cash in a liquidation?
Solutions
Expert Solution
| a) Calculation of Safe Payements | ||||||||
| Cash | $41,000 | |||||||
| Other Assets | $101,000 | |||||||
| Liabilities | $29,000 | |||||||
| Miller, Capital | $51,000 | (60% of profits/losses) | ||||||
| Tyson, Capital | $51,000 | (20% of profits/losses) | ||||||
| Watson, Capital | $11,000 | (20% of profits/losses) | ||||||
| We have $41,000 in cash and $29,000 in Liabilities. Creditors have first claim on the firm's assets | ||||||||
| so $29,000 has to be held back to satisfy the creditors | ||||||||
| Therefore Safe payment available to partners is $12,000 | ||||||||
| Cash | Other Assets | Liabilities | Miller, Capital | Tyson, Capital | Watson, Capital | |||
| Balances | $41,000.00 | $101,000.00 | $29,000.00 | $51,000.00 | $51,000.00 | $11,000.00 | ||
| Loss on Non- Cash Assets | -$101,000.00 | -$60,600.00 | -$20,200.00 | -$20,200.00 | ||||
| Balances | -$9,600.00 | $30,800.00 | -$9,200.00 | |||||
| Allocate M's and W's Deficit | -$18,800.00 | |||||||
| Final Balance | $41,000.00 | $29,000.00 | $12,000.00 | |||||
| b) Amount at which other assets be sold so that each partner receives some money | |||||||||
| Watson's Total Capital is $11,0000 and has a profit/loss sharing ratio of 20%. Therefore Watson can maximum bare a loss of $11,000 | |||||||||
| and Firm can bear a maximum loss of $55,000 (11,000/20%) so that no partner will become insolvent | |||||||||
| Therefore if Other assets are sold at any price above $46,000 then each partner will receive some cash in liquidation | |||||||||
| For Example if Other Assets is sold for $46,500, then each partner will receive some cash | |||||||||
| Cash | Other Assets | Liabilities | Miller, Capital | Tyson, Capital | Watson, Capital | ||||
| Balances | $41,000.00 | $101,000.00 | $29,000.00 | $51,000.00 | $51,000.00 | $11,000.00 | |||
| Loss on Non- Cash Assets | $46,500.00 | -$54,500.00 | -$32,700.00 | -$10,900.00 | -$10,900.00 | ||||
| Balances | $18,300.00 | $40,100.00 | $100.00 | ||||||
| Final Balance | $87,500.00 | $29,000.00 | $18,300.00 | $40,100.00 | $100.00 | ||||
ekkarill92 answered 2 years agoRelated Solutions
The following condensed balance sheet is for the partnership ofMiller, Tyson, and Watson, who share...
The following condensed balance sheet is for the partnership of
Miller, Tyson, and Watson, who share profits and losses in the
ratio of 6:2:2, respectively: Cash$ 48,000 Liabilities$ 46,000 Other assets148,000 Miller, capital66,000 Tyson, capital66,000 Watson, capital18,000 Total assets$196,000 Total liabilities and
capital$196,000For how much money must the other assets be sold so that each
partner receives some amount of cash in a liquidation?
The following condensed balance sheet is for the partnership of Hardwick, Saunders, and Ferris, who share...
The following condensed balance sheet is for the partnership of Hardwick, Saunders, and Ferris, who share profits and losses in the ratio of 4:3:3, respectively:
Cash
$ 98,000
Accounts payable
$ 78,000
Other assets
840,000
Ferris, loan
59,000
Hardwick, loan
49,000
Hardwick, capital
360,000
Saunders, capital
250,000
Ferris, capital
240,000
Total assets
$ 987,000
Total liabilities and capital
$ 987,000...
The following condensed balance sheet is for the partnership of Hardwick, Saunders, and Ferris, who share...
The following condensed balance sheet is for the partnership of
Hardwick, Saunders, and Ferris, who share profits and losses in the
ratio of 4:3:3, respectively:
Cash
$
87,000
Accounts payable
$
112,000
Other assets
785,000
Ferris, loan
48,000
Hardwick, loan
38,000
Hardwick, capital
320,000
Saunders, capital
220,000
Ferris, capital
210,000
Total assets
$
910,000
Total liabilities and capital
$
910,000
The partners decide to liquidate the partnership. Forty percent
of the other assets are sold for $100,000. Prepare a proposed...
Following is the condensed balance sheet of Martinez, O'Neill and Clemens, partners who share profits or...
Following is the condensed balance sheet of Martinez, O'Neill
and Clemens, partners who share profits or losses in the ratio of 2
: 3 : 5.
Cash
$50,000
Liabilities
$200,000
Other assets
1,050,000
Capital - Martinez
100,000
Capital - O'Neill
300,000
Capital - Clemens
500,000
Total assets
$1,100,000
Total liabilities and capital
$1,100,000
Required
(a) Assume that the partnership’s assets and liabilities are
fairly valued as shown. The partners wish to admit Jeter as a
partner with a 40 percent...
SB The following condensed balance sheet is... The following condensed balance sheet is presented for the...
SB The following condensed balance sheet is...
The following condensed balance sheet is presented for the
partnership of D, E, and F who share profits and losses in the
ratio of 5:3:2, respectively:
Cash
$
100,000
Other Assets
480,000
$
580,000
Liabilities
$
160,000
D, Capital
200,000
E, Capital
130,000
F, Capital
90,000
Total
$
580,000
The partners agreed to liquidate the partnership after selling the
other assets.
TB MC Qu. 16-12 Refer to the above information. If the
other......
The ABC partnership reports the following condensed balance sheet: Cash $250,000 Liabilities $600,000 Noncash assets 1,200,000...
The ABC partnership reports the following condensed balance
sheet:
Cash
$250,000
Liabilities
$600,000
Noncash assets
1,200,000
Partner A, capital
300,000
Partner B, capital
450,000
Partner C, capital
100,000
Total assets
$1,450,000
Total liabilities and partner capital
$1,450,000
The partners wish to liquidate the partnership. The noncash
assets are sold for $800,000 with the loss distributed to the
partners in the ratio of 30%:20%:50% to partner A, B, and C,
respectively. The liabilities are paid in full. Assume that any
partners...
The following balance sheet was prepared for ABC Partnership, whose partner’s share net income and losses...
The following balance sheet was prepared for ABC
Partnership, whose partner’s share net income and losses in the
ratio of 3:1:1 respectively:
Cash
$
40,000
Liabilities $
70,000
Other assets
140,000
Abe, Capital
50,000
Ben, Capital
50,000
Cher,
Capital
10,000
Totals
$180,000
$180,000
=======
=======
The partners liquidate the partnership. Other assets are
realized for $80,000.
Prepare a working paper to compute the amount of cash
that may be paid to creditors and to partners at this...
Ratios (Appendix) Miller Company's condensed income statement for 2016 and December 31, 2016, balance sheet follow:...
Ratios (Appendix)
Miller Company's condensed income statement for 2016 and
December 31, 2016, balance sheet follow:
Income Statement
Sales (net)
$304,400
Cost of goods sold
(183,600)
Gross profit
$120,800
Operating expenses
(82,000)
Operating income
$38,800
Interest expense
(7,000)
Income before income taxes
$31,800
Income taxes
(10,000)
Net income
21,800
Balance Sheet
Cash
$8,200
Accounts payable
$18,000
Receivables (net)
14,700
Other current liabilities
6,800
Inventory
19,300
Bonds payable, 10%
70,000
Property, plant, and equipment (net)
195,800
Common stock, $10 par
80,500...
Assume the following data on January 1, 2019 for KLM Partnership had the following condensed balance...
Assume the following data on January 1, 2019 for KLM Partnership
had the following condensed balance sheet:
Assets
Liabilities and Capital
Cash
P60,000
Liabilities
P12,000
Non-cash
assets
48,000
K, Capital
(30%)
36,000
Loans receivable –
K
6,000
L, Capital
(50%)
48,000
M, Capital
(20%)
18,000
Total
P114,000
P114,000
The percentages in parentheses after partner’s capital balances
represent their respective interests in profits and losses. On May
1, 2019, K retires from the partnership. The net income of...
The following condensed balance sheet is for Bach Company for the current fiscal year. The current...
The following condensed balance sheet is for Bach Company for
the current fiscal year. The current year sales total $600,000 and
net income is $30,000. Bach’s dividend payout ratio is
40%.
Cash $50,000 A/Payable $75,000
A/Receivable 80,000 Accruals 10,000
Inventories 60,000 Notes Payable 25,000
Total Current Assets $190,000 Total Current Liabilities
$110,000
Fixed assets, net 110,000 Long-term Debt 50,000
Common Stock 80,000
Retained Earnings 60,000
Total Assets $300,000 Total Liab. & Equity $300,000
For the coming fiscal year, the company...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- . Use the following information to calculate your company's expected return State Probability Return Boom 20%...
- You are considering the following two projects and can only take one. Your cost of capital...
- C++: Write a program that produces truth tables for the following compound propositions. Write the header...
- 1. What is the historical role of investment bankers ? Has this role changed ? Why...
- How were the original Internet requirements met through its design? What are the two main requirements...
- discuss crowdfunding on platforms: What features of the services incorporate virality? What are some of the...
- A textbook of mass 2.08 kg rests on a frictionless, horizontal surface. A cord attached to...
ADVERTISEMENT