Question
In: Accounting
A partnership has the following account balances at the date of termination: Cash, $96,000; Noncash Assets,...
A partnership has the following account balances at the date of termination: Cash, $96,000; Noncash Assets, $740,000; Liabilities, $494,000; Bell, capital (50 percent of profits and losses), $160,000; Mann, capital (30 percent), $110,000; Scott, capital (20 percent), $72,000. The following transactions occur during liquidation:
- Noncash assets with a book value of $580,000 are sold for $480,000 in cash.
- A creditor reduces his claim against the partnership from $160,000 to $130,000, and this amount is paid in cash.
- The remaining noncash assets are sold for $130,000 in cash.
- The remaining liabilities of $334,000 are paid in full.
- Liquidation expenses of $22,000 are paid in cash.
- Cash remaining after the above transactions have occurred is distributed to the partners.
Prepare a statement of partnership liquidation to determine how much cash each partner receives from the liquidation of the partnership. (Amounts to be deducted should be entered with a minus sign.)
| Cash | Noncash Assets | Liabilities | Bell, Capital (50%) | Mann, Capital (30%) | Scott, Capital (20%) | |
| Beg. Balance | ||||||
| Sale of noncash asset | ||||||
| Pay liabilities | ||||||
| Sale of remaining noncash assets | ||||||
| Pay remaining liabilities | ||||||
| Pay liquidation expenses | ||||||
| Subtotal | ||||||
| Distribution to partners | ||||||
| Ending balances |
Solutions
Expert Solution
Solution
| Cash | Non-cash Assets | Liabilities | Bell, Capital (50%) | Mann, Capital (30%) | Scott, Capital (20%) | |
| Beg. Balance | $ 96,000 | $ 740,000 | $ 494,000 | $ 160,000 | $ 110,000 | $ 72,000 |
| Sale of noncash asset | $ 480,000 | $ (580,000) | $ (50,000) | $ (30,000) | $ (20,000) | |
| Pay liabilities | $ (130,000) | $ (160,000) | $ 15,000 | $ 9,000 | $ 6,000 | |
| Sale of remaining non-cash assets | $ 130,000 | $ (160,000) | $ (15,000) | $ (9,000) | $ (6,000) | |
| Pay remaining liabilities | $ (334,000) | $ (334,000) | ||||
| Pay liquidation expenses | $ (22,000) | $ (11,000) | $ (6,600) | $ (4,400) | ||
| Subtotal | $ 220,000 | $ - | $ - | $ 99,000 | $ 73,400 | $ 47,600 |
| Distribution to partners | $ (220,000) | $ (99,000) | $ (73,400) | $ (47,600) | ||
| Ending balances | $ - | $ - | $ - | $ - | $ - | $ - |
ekkarill92 answered 1 year agoRelated Solutions
The following account balances for the noncash current assets and current liabilities of Suffolk Company are...
The following account balances for the noncash current assets
and current liabilities of Suffolk Company are available:
December 31
2017
2016
Accounts receivable
$43,260
$34,940
Inventory
29,860
40,010
Prepaid rent
16,550
15,230
Totals
$89,670
$90,180
Accounts payable
$26,410
$19,020
Income taxes payable
5,730
9,700
Interest payable
14,500
12,250
Totals
$46,640
$40,970
Net income for 2017 is $38,690. Depreciation expense is $18,220.
Assume that all sales and all purchases are on account.
Required:
1. Prepare the Operating Activities section of
the...
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A partnership has liquidated all assets but still reports the following account balances: Beck, loan $...
A partnership has liquidated all assets but still reports the
following account balances:
Beck, loan
$
9,000
Cisneros, capital (40%)
4,800
Beck, capital (20%)
(9,600
)
(deficit)
Sadak, capital (10%)
(10,400
)
(deficit)
Emerson, capital (20%)
15,600
Page, capital (10%)
(15,000
)
(deficit)
The partners split profits and losses as follows: Cisneros, 40
percent; Beck, 20 percent; Sadak, 10 percent; Emerson, 20 percent;
and Page 10 percent.
Assuming that all partners are personally insolvent except for
Sadak and Emerson, how...
A partnership has liquidated all assets but still reports the following account balances: The partners split...
A partnership has liquidated all assets but still reports the following account balances:
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Assuming that all partners are personally insolvent except for Sadak and Emerson, how much cash must Sadak now contribute to this partnership?
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A partnership has liquidated all assets but still reports the
following account balances:
Beck, loan
$
5,500
Cisneros, capital (40%)
3,600
Beck, capital (20%)
(12,200
)
(deficit)
Sadak, capital (10%)
(8,200
)
(deficit)
Emerson, capital (20%)
15,500
Page, capital (10%)
(6,200
)
(deficit)
The partners split profits and losses as follows: Cisneros, 40
percent; Beck, 20 percent; Sadak, 10 percent; Emerson, 20 percent;
and Page 10 percent.
Assuming that all partners are personally insolvent except for
Sadak and Emerson, how...
A partnership has liquidated all assets but still reports the following account balances: Beck, loan $...
A partnership has liquidated all assets but still reports the
following account balances:
Beck, loan
$
6,000
Cisneros, capital (40%)
3,900
Beck, capital (20%)
(12,300
)
(deficit)
Sadak, capital (10%)
(8,300
)
(deficit)
Emerson, capital (20%)
15,000
Page, capital (10%)
(6,300
)
(deficit)
The partners split profits and losses as follows: Cisneros, 40
percent; Beck, 20 percent; Sadak, 10 percent; Emerson, 20 percent;
and Page 10 percent.
Assuming that all partners are personally insolvent except for
Sadak and Emerson, how...
A partnership has liquidated all assets but still reports the following account balances: Beck, loan $...
A partnership has
liquidated all assets but still reports the following account
balances:
Beck, loan
$
6,000
Cisneros,
capital (40%)
3,600
Beck, capital
(20%)
(13,200
)
(deficit)
Sadak, capital
(10%)
(9,200
)
(deficit)
Emerson, capital
(20%)
18,000
Page, capital
(10%)
(7,200
)
(deficit)
The partners split
profits and losses as follows: Cisneros, 40 percent; Beck, 20
percent; Sadak, 10 percent; Emerson, 20 percent; and Page 10
percent.
Assuming that all
partners are personally insolvent except for Sadak and Emerson, how...
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The partnership of Hendrick, Mitchum, and Redding has the
following account balances:
Cash
$
57,000
Liabilities
$
36,000
Noncash assets
142,000
Hendrick, capital
108,000
Mitchum, capital
77,000
Redding, capital
(22,000
)
This partnership is being liquidated. Hendrick and Mitchum are
each entitled to 40 percent of all profits and losses with the
remaining 20 percent going to Redding.
What is the maximum amount that Redding might have to contribute
to this partnership because of the deficit capital balance?
How should...
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