The partnership is being dissolved. Unfortunately, the liquidating partner found out that the assets of the partnership are not enough to pay all the liabilities to the creditors. How will the partnership be able to pay all its liabilities?
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- Which of the following is a disadvantage of general partnerships? a) A partner who withdraws from a partnership cannot be held liable for any debts the firm had at the time of withdrawal. b) Compared to the other forms of ownership, the paperwork and costs involved in forming a general partnership are the most extensive. c) All general partners have unlimited liability for the debts and obligations of their business. d) The partners in a general partnership are exposed to double taxation.A disadvantage that is NOT peculiar to the partnership form of organization includes a.the interest of a partner in the partnership cannot be transferred without the consent of the other partners. b.termination of the partnership agreement, bankruptcy of the firm, or death of one of the partners dissolves the partnership. c.each partner is individually liable for all of the debts of the partnership. d.the partners do not make the decisions that run the business.Which of the following is a disadvantage of general partnerships? ( a) The partners in a general partnership are exposed to double taxation. ( b) Compared to the other forms of ownership, the paperwork and costs involved in forming a general partnership are the most extensive. ( c) A partner who withdraws from a partnership cannot be held liable for any debts the furm had at the time of withdrawal. ( d) All general partners have unlimited liability for the debts and obligations of their business.
- Kay, Kat, and Kim are partners. In a liquidation, Kay’s share of partnership losses exceeds her capital account balance. Moreover, she is unable to meet the deficit from her personal assets, and her partners share the excess losses. Does this relieve Kay of liability?If a partnership is liquidated, partners ( except for limited partners) are liable to the extent of their personal assets. In case a Corporation becane insolvent and decided to liquidate, would the owners (sharehorlders) also liable to the extend of their personal assets?When Billie retired from Billie, Ive, and Fromis partnership, he received cash in excess of his capital account balance. Under the bonus method, the excess received by Billie a. had no effect on the capital account balances of Ive and Fromis. b. was recognized as bonus to the old partners c. reduced the capital account balances of both Ive and Fromis d. was recognized as an operating expense Which of the following will not result in dissolution of a partnership? a. Incapacity of a partner b. admission of a new partner c. bankruptcy of a partner d.. negative capital balance of a partner When a partner retires, the book of the partnership should be adjusted as of a. the date of retirement b. interim report c. the balance sheet date d. all of the above
- The partnership of Winn, Xie, Yang, and Zed has the following balance sheet: Zed is personally insolvent, and one of his creditors is considering suing the partnership for the $10,000 that is currently owed. The creditor realizes that this litigation could result in partnership liquidation and does not wish to force such an extreme action unless Zed is reasonably sure of obtaining at least $10,000 from the liquidation. Determine the amount for which the partnership must sell the other assets to ensure that Zed receives $10,000 from the liquidation. Liquidation expenses are expected to be $30,000.Which of the following transactions or events does not affect the total assets of a partnership? A. A partnership is dissolved and its assets and liabilities are revalued to fair value. B. An old partner retires and his capital balance is settled by the partnership at a lower amount. C. An incoming partner purchases interest from an existing partner. D. A new partner is admitted in a partnership when he invested noncash asset to the partnership.During a liquidation, if a partner’s capital account balance drops below zero, what Should Happen? The other partners file a legal suit against the partner with the deficit balance. The partner with the highest capital balance contributes sufficient assets to eliminate the deficit. The deficit balance is removed from the accounting records with only the remaining partners sharing in future gains and losses. The partner with a deficit contributes enough assets to offset the deficit balance.
- In the liquidation of a partnership, why might a partner be concerned that a fellow partner has a deficit net capital balance, and how might such a deficit be eliminated?Which of the following transactions or events does not affect the total assets of a partnership? An old partner retires and his capital balance is settled by the partnership at a lower amount. A partnership is dissolved and its assets and liabilities are revalued to fair value. An incoming partner purchases interest from an existing partner. A new partner is admitted in a partnership when he invested noncash asset to the partnership.1. In a partnership liquidation the realization losses result in a debit balance in one partners’ capital account. If this partner fails to contribute personal assets to make up this deficit, how should the debit balance be handled by the partners? a. It should be written off against partnership profits like any other bad debt. b. It should be allocated to all the partners in their profit and loss ratio. c. It should be allocated to the remaining partners in their remaining P and L ratio. d. It should be set up as a receivable and turned over to a collection agency. 2. During liquidation, a partners’ capital account balance drops below zero. What should happen? a. The other partners should file a legal suit against the partner with the deficit balance. b. The partner with the highest capital balance should contribute sufficient assets to eliminate the deficit. c. The deficit balance…