Question

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QS 12-9 Liquidation of partnership LO P5

[The following information applies to the questions displayed below.]
  

The Field, Brown & Snow partnership was begun with investments by the partners as follows: Field, $130,800; Brown, $167,900; and Snow, $154,600. The operations did not go well, and the partners eventually decided to liquidate the partnership, sharing all losses equally. On May 31, after all assets were converted to cash and all creditors were paid, only $45,600 in partnership cash remained.

QS 12-9 Part 1

1. Compute the capital account balance of each partner after the liquidation of assets and the payment of creditors. (Amounts to be deducted and negative capital balances should be entered with a minus sign.)

Required information

QS 12-9 Liquidation of partnership LO P5

[The following information applies to the questions displayed below.]
  

The Field, Brown & Snow partnership was begun with investments by the partners as follows: Field, $130,800; Brown, $167,900; and Snow, $154,600. The operations did not go well, and the partners eventually decided to liquidate the partnership, sharing all losses equally. On May 31, after all assets were converted to cash and all creditors were paid, only $45,600 in partnership cash remained.

QS 12-9 Part 1

1. Compute the capital account balance of each partner after the liquidation of assets and the payment of creditors. (Amounts to be deducted and negative capital balances should be entered with a minus sign.)

	Field Brown Snow Total Initial investments Allocation of gains (losses) Capital balances

QS 12-9 Part 2

2. Assume that any partner with a deficit agrees to pay cash to the partnership to cover the deficit. Present the journal entries on May 31 to record (a) the cash receipt from the deficient partner(s) and (b) the final disbursement of cash to the partners.

Record the receipt of cash from the deficient partner(s).

Record the disbursement of the remaining cash to the partner(s)

3. Assume that any partner with a deficit is not able to reimburse the partnership. Present journal entries (a) to transfer the deficit of any deficient partners to the other partners and (b) to record the final disbursement of cash to the partners.

Record the transfer of the deficit of any deficient partner(s) to the other partner(s).

Record the disbursement of the remaining cash to the partner(s).

QS 12-10 Partner return on equity LO A1

Howe and Duley’s company is organized as a partnership. At the prior year-end, partnership equity totaled $150,100 ($98,700 from Howe and $51,400 from Duley). For the current year, partnership net income is $25,900 ($19,000 allocated to Howe and $6,900 allocated to Duley), and year-end total partnership equity is $199,000 ($140,600 from Howe and $58,400 from Duley). Compute the total partnership return on equity and the individual partner return on equity ratios.

	Total Partnership Return on Equity Choose Numerator: / Choose Denominator: = Total Partnership Return on Equity / = Total Partnership Return on Equity / = Individual Partner Return on Equity Partners Choose Numerator: / Choose Denominator: = Return on Equity = Return on Equity Howe Duley

Problem 12-6A Liquidation of a partnership LO P5

Kendra, Cogley, and Mei share income and loss in a 3:2:1 ratio. The partners have decided to liquidate their partnership. On the day of liquidation their balance sheet appears as follows.
  

KENDRA, COGLEY, AND MEI Balance Sheet May 31
Assets				Liabilities and Equity
Cash	$	103,900		Accounts payable	$	258,000
Inventory		537,600		Kendra, Capital		76,700
				Cogley, Capital		172,575
				Mei, Capital		134,225
Total assets	$	641,500		Total liabilities and equity	$	641,500

Required:
For each of the following scenarios, complete the schedule allocating the gain or loss on the sale of inventory. Prepare journal entries to record the below transactions. (Do not round intermediate calculations. Amounts to be deducted or Losses should be entered with a minus sign. Round your final answers to the nearest whole dollar.)

(1) Inventory is sold for $608,400.
(2) Inventory is sold for $469,200.
(3) Inventory is sold for $358,800 and any partners with capital deficits pay in the amount of their deficits.
(4) Inventory is sold for $298,800 and the partners have no assets other than those invested in the partnership.
  

Answer 1