E 17-1 Simple liquidation—Schedule of cash availableThe partnership of Flo and Fay is in the process of liquidation. On January 1, 2016, the ledger shows account balances as follows:Cash$10,000Accounts payable$25,000Accounts receivable45,000Flo capital45,000Lumber inventory50,000Fay capital35,000On January 10, 2016, the lumber inventory is sold for $40,000, and during January, accounts receivable of $41,000 is collected. No further collections on the receivables are expected. Profits are shared 60 percent to Flo and 40 percent to Fay.RequiredPrepare a schedule showing how the cash available on February 1, 2016, should be distributed.

Question
Asked Sep 3, 2019
53 views

E 17-1 Simple liquidation—Schedule of cash available

The partnership of Flo and Fay is in the process of liquidation. On January 1, 2016, the ledger shows account balances as follows:

Cash

$10,000

Accounts payable

$25,000

Accounts receivable

45,000

Flo capital

45,000

Lumber inventory

50,000

Fay capital

35,000

On January 10, 2016, the lumber inventory is sold for $40,000, and during January, accounts receivable of $41,000 is collected. No further collections on the receivables are expected. Profits are shared 60 percent to Flo and 40 percent to Fay.

Required

Prepare a schedule showing how the cash available on February 1, 2016, should be distributed.

check_circle

Expert Answer

Step 1

Liquidation: Liquidation is a process of dissolving the business, realizing the assets, repaying the cr...

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Accounting

Related Accounting Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: (Prepared from a situation suggested by Professor John W. Hardy.) Lone Star Meat Packers is a major ...

A: 1 pound=16 ounces.One pounce T-Bone steak will give 6 ounce filet mignon & 8 ounce New York cutT...

question_answer

Q: Ivanhoe Co. sells $396,000 of 12% bonds on June 1, 2017. The bonds pay interest on December 1 and Ju...

A: The price of bond and ammortization schedule is as follows : NOTE :  ONLY THE AMMORTIZATION SCHEDULE...

question_answer

Q: 1.- Why are bonds treated as retired during the consolidation process? 2.- How long-term constructio...

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question s...

question_answer

Q: Many businesses borrow money during periods of increased business activity to finance inventory and ...

A: When Cash is recieved against promissory note, an asset is received and a liability is created. when...

question_answer

Q: Regarding taxpayers having a tough time of volume of tax regulations. What does the concept "substan...

A: Substance over form: It is an accounting concept, which means that the business must record those tr...

question_answer

Q: Process Costing in Sugar Manufacturing The food-processing industry, like most process industries, i...

A: Process Costing: It is a method of cost accounting used by an enterprise with processes categorised ...

question_answer

Q: A 25-year annuity was purchased with $225,000 that had accumulated in a RRSP.  The annuity provides ...

A: DefinitionRRSP:  A Registered Retirement Saving Plan is an investment cum retirement saving plan for...

question_answer

Q: How do I properly journalize a accounting cycle?

A: Note: Journalizing is one of the steps of an accounting cycle. Hence, journalizing of accounting tra...

question_answer

Q: I understand the accounting equation is: Liabilities + Stock Holders’ Equity = Assets How do you pre...

A: The basic Accounting Equation is  Assets = Equity + LiabilitiesAssets are the resources owned by the...