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
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