Question

In: Accounting

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

Under both assumptions, prepare the entries to record:

(a) The sale of noncash assets.

(b) The allocation of the gain or loss on liquidation to the partners.

(c) Payment of creditors.

(d) Distribution of cash to the partners.

7) Jack Jones, a Partner in the Hyland Company made the following capital cash contributions to the company in 2019.

. 01/01/17: $100,000

. 03/31/17: $35,000

. 07/01/17: $15,000

. 11/30/17: $20,000

The Partnership agreed to pay Jones a 12% interest on his weighted average capital balance as of December 31.

Instructions

a. Compute the interest paid to Jones on 31 December 2019.

8) James, Kenny and Larry have following capital balances 75,000; 45,000 and 30,000 respectively. Income distribution ratios are 3:2:1 for James, Kenny and Larry. Prepare journal entries to record the withdrawal under the following assumptions:

(a) Larry retires and the remaining partners, James and Kenny agree to pay him $20,000 each directly from their personal assets for one half of Larry's interest.

(b) Larry retires and receives $35,000 from the partnership. The ratio for James and Kenny is 3:2

Solutions

Expert Solution

6a. DR CASH $84000

DR LOSS ON SALE OF ASSETS $59000

CR NON CASH ASSETS $143000

(BEING ASSETS SOLD)

2.DR MARTHA $ 23600

DR NATHAN $ 23600

DR ORIN $11800

CR LOSS ON SALE OF ASSETS $ 59000

(BEING LOSS DISTRIBUTED AMONG THE PARTNERS IN THE RATION OF 2:2:1)

3. DR CREDITORS $ 36000

CR CASH $ 36000

(BEING CREDITORS PAID)

4. DR MARTHA$33600

DR NATHAN $ 33600

DR ORIN $ 16800

CR CASH $ 84000

(BEING CASH DISTRIBUTED AMONG THE PARTNERS IN THE RATION OF 2:2:1)

6B.DR CASH $35000

DR LOSS ON SALE OF ASSETS $108000

CR NON CASH ASSETS $ 143000

(BEING ASSETS SOLD)

2 DR..LOSS ON SALE OF ASSETS $108000

CR MARTHA $43200

CR NATHAN $43200

CR ORIN $ 21600

(BEING LOSS DISTRIBUTED AMONG THE PARTNERS IN THE RATIO OF 2:2:1)

3. DR CREDITORS $ 35000

CR CASH $ 35000

(BEING CREDITORS PAID )

4. NO CASH DISTRIBUTION ENTRY WILL BE PASSED BECAUSE NO CASH AVAILBLE IN THE FIRM

7A.

DATE	MONTH	AMOUNT	PRODUCT
01/01/17	12	100000	1200000
31/03/17	9	35000	315000
01/07/17	6	15000	90000
30/11/17	1	20000	20000

WE ASSUME MONT IS WEIGHT

TOTAL OF PRODUCT IS $1625000

INTERST ON WEIGHTED AVERAGE CAPITAL IS $1625000*12/100*12=$16250

8A. DR LARRYS $40000

CR JAMES $ 20000

CR KENNY $ 20000

(BEING LARRYS AMOUNT PAID IN THE RATIO OF 1:1)

8B. DR LARRY $35000

CR JAMES $ 21000

CR KENNY $ 14000

(BEING LARRY AMOUNT PAID IN THE RATIO OF 3:2)

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Dawes, Vickerman, and Wrester are liquidating their partnership. Before selling the assets and paying the liabilities,...

Dawes, Vickerman, and Wrester are liquidating their partnership. Before selling the assets and paying the liabilities, the capital balances are Dawes $46,000; Vickerman, $25,000; and Wrester, $23,000. The profit-and-loss-sharing ratio has been 3:1:1 for Dawes, Vickerman, and Wrester, respectively. The partnership has $84,000 cash, $ 41,000 non-cash assets, and $31,000 accounts payable. Requirements: 1. Assuming the partnership sells the non-cash assets for $45,000, record the journal entries for the sale of non-cash assets, allocation of gain or loss on liquidation,...

Ali, Ahmed, and Khalid are liquidating their partnership. Before selling the assets and paying the liabilities, the capital balances are Ali, OR 60,000; Ahmed, OR 70,000; and Khalid, OR 50,000.

Ali, Ahmed, and Khalid are liquidating their partnership. Before selling the assets and paying the liabilities, the capital balances are Ali, OR 60,000; Ahmed, OR 70,000; and Khalid, OR 50,000. The profit and loss ratio has been 2:3:1 for Ali, Ahmed, and Khalid, respectively. The partnership has OR 35,000 cash, OR 170,000 non cash assets, OR 25,000 accounts payable Required: Journalize the sale of the non-cash assets for OR 200,000, the payment of the liabilities, and the payment to...

The LMN Partnership has the following assets and liabilities before any reduction for year-end principal payments...

The LMN Partnership has the following assets and liabilities before any reduction for year-end principal payments on the liabilities. Assume the book basis and tax basis are the same amount. Assets Basis=$300,000 Value= $400,000. Nonrecourse debt = Basis $500,000 and Value = $500,000. If the partners have a deficit in their capital accounts of ($100,000), what is the amount of minimum gain chargeback if partnership loss for the year is ($20,000) and the liabilities are reduced by $250,000? Please explain...

Partnership Distributions What is the difference between the definition of a non-liquidating distributions and a liquidating...

Partnership Distributions What is the difference between the definition of a non-liquidating distributions and a liquidating distribution? What is the tax significance between the two? What issues arise if a partner contributes appreciated property to a partnership and other appreciated property is distributed to that partner? For example, a partner has a $60,000 basis in the partnership interest just before receiving a parcel of land as a liquidating distribution, the partner will have no remaining precontribution gain and will receive...

A partnership has the following assets and liabilities. The book basis and tax basis are the...

A partnership has the following assets and liabilities. The book basis and tax basis are the same amount. Aseet Basis Value Building 90,000 92,000 Accounts payable 8,000 8,000 Note Payable 85,000 85,000 Total 183,000 185,000 If the note payable is a nonrecourse mortgage on the building, what is the amount of the minimum gain?

In partnership what is the difference between liquidating vs. non-liquidating distributions? Proportionate Vs, Disproportionate distribution? and...

In partnership what is the difference between liquidating vs. non-liquidating distributions? Proportionate Vs, Disproportionate distribution? and cash distribution?

Statement of Partnership Liquidation After closing the accounts on July 1, prior to liquidating the partnership,...

Statement of Partnership Liquidation After closing the accounts on July 1, prior to liquidating the partnership, the capital account balances of Gold, Porter, and Sims are $31,800, $45,000, and $20,100, respectively. Cash, noncash assets, and liabilities total $47,100, $83,400, and $33,600, respectively. Between July 1 and July 29, the noncash assets are sold for $66,600, the liabilities are paid, and the remaining cash is distributed to the partners. The partners share net income and loss in the ratio of 3:2:1....

Statement of Partnership Liquidation After closing the accounts on July 1, prior to liquidating the partnership,...

Statement of Partnership Liquidation After closing the accounts on July 1, prior to liquidating the partnership, the capital account balances of Gold, Porter, and Sims are $27,600, $39,300, and $17,400, respectively. Cash, noncash assets, and liabilities total $42,900, $72,600, and $31,200, respectively. Between July 1 and July 29, the noncash assets are sold for $58,200, the liabilities are paid, and the remaining cash is distributed to the partners. The partners share net income and loss in the ratio of 3:2:1....

liquidating distributions of the partnership are required to be made in accordance with the positive capital...

liquidating distributions of the partnership are required to be made in accordance with the positive capital account balances of the partners. Explain why this is so important.

XY Partnership has the following assets and liabilities at year-end. The book basis and tax basis...

XY Partnership has the following assets and liabilities at year-end. The book basis and tax basis are the same amount. Assets Basis Value Machine $ 10,000 $ 5,000 Building $80,000 $ 82,000 Note 1 $ 3,000 $ 3,000 Note 2 $90,000 $ 90,000 Note 1 is a nonrecourse note attached to the machine; Note 2 is a nonrecourse note attached to the building. What is the amount of the partnership's minimum gain? A. $0 B. $3,000 C. $6,000 D. $10,000

Subjects