After working for In the Kitchen remodeling business for several years, Terryand Phyllis decided to go into business for themselves and formed the KitchensJust for You partnership. Three years ago, they admitted Connie as a partnerand recognized goodwill at that time because of her good client list for plannedkitchen makeovers. However, they were not able to gain a sufficient market fornew customers and on September 1, 20X9, they agreed to dissolve andliquidate the business. They decided on an installment liquidation to completethe projects already initiated. The balance sheet, with profit and loss-sharingpercentages at the beginning of liquidation, is as follows:KITCHENS JUSTFOR YOUBalance SheetSeptember 1,20X9AssetsLiabilities andEquitiesCash$6,000$ 39,000AccountsPayableReceivables68,000Connie, Loan14,000Terry, Loan8,000Terry, Capital11,500(30%)Inventory48,00037,000Phyllis, Capital(60%)Goodwill22,00050,500Connie, Capital(10%)Total Assets$152,000Total Liabilities $ 152,000& EquitiesConnie's loan was for working capital; the loan to Terry was for his unexpectedpersonal medical bills.During September 20X9, the first month of liquidation, the partnershipcollected $43,000 in receivables and decided to write off $14,000 of theremaining receivables. Sales of one-half of the book value of the inventoryrealized a loss of $6,000. The partners estimate that the costs of liquidating thebusiness (newspaper ads, signs, etc.), are expected to be $6,000 for theremainder of the liquidation process.Required:Prepare a schedule of safe payments to partners as of September 30, 20X9, toshow how the available cash should be distributed to the partners. Pleasefollow the practical guidelines when completing this worksheet.

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KITCHENS JUST FOR YOU Balance Sheet September 1, 20X9 Assets Cash 6,000 $ 39,000 Accounts Payable Receivables 68,000 Connie, Loan 14,000 Terry, Loan 8,000 Terry, Capital 11,500 (30%) Inventory 48,000 Phyllis, Capital 37,000 (60%) Goodwill 22,000 50,500 Connie, Capital (10%) Total Assets $ 152,000 $152,000 Total Liabilities & Equities Connie's loan was for working capital; the loan to Terry was for his unexpected personal medical bills. During September 20X9, the first month of liquidation, the partnership collected $43,000 in receivables and decided to write off $14,000 of the remaining receivables. Sales of one-half of the book value of the inventory realized a loss of $6,000. The partners estimate that the costs of liquidating the business (newspaper ads, signs, etc.), are expected to be $6,000 for the remainder of the liquidation process. Required: Prepare a schedule of safe payments to partners as of September 30, 20X9, to show how the available cash should be distributed to the partners. Please follow the practical guidelines when completing this worksheet. Liabilities and Equities $

KITCHENS JUST FOR YOU Balance Sheet September 1, 20X9 Assets Cash 6,000 $ 39,000 Accounts Payable Receivables 68,000 Connie, Loan 14,000 Terry, Loan 8,000 Terry, Capital 11,500 (30%) Inventory 48,000 Phyllis, Capital 37,000 (60%) Goodwill 22,000 50,500 Connie, Capital (10%) Total Assets $ 152,000 $152,000 Total Liabilities & Equities Connie's loan was for working capital; the loan to Terry was for his unexpected personal medical bills. During September 20X9, the first month of liquidation, the partnership collected $43,000 in receivables and decided to write off $14,000 of the remaining receivables. Sales of one-half of the book value of the inventory realized a loss of $6,000. The partners estimate that the costs of liquidating the business (newspaper ads, signs, etc.), are expected to be $6,000 for the remainder of the liquidation process. Required: Prepare a schedule of safe payments to partners as of September 30, 20X9, to show how the available cash should be distributed to the partners. Please follow the practical guidelines when completing this worksheet. Liabilities and Equities $

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter1: Introductin To Taxation

Section: Chapter Questions

Problem 9P

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