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Bob, Frank, and Frances are equal partners in a closely held business. Although the partners work well together, their spouses and children do not. No partner is ready to quit the business and/or retire, but they are each worried about how the business would operate if one of the partners left the business due to death or disability. Each partner is financially overextended and thus does not enjoy good cash flow currently.
Which one of the following is the most appropriate business transfer technique for the partners to use considering these circumstances?
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- Mr. Ahmed, the general partner of a big furniture store in Muscat is going to contribute a bigger share of money to settle the partnership's liabilities to its creditors. Why Ahmed is going to do so? None of the choices are correct General partners will contribute more because they have more money General partners have unlimited liability General partners have a distinct legal personalitySebastian, Wyatt, and Mathew are close friends who graduated with master's degrees in accounting from an Ivy League institution. Instead of seeking employment, the friends decided to create their own accounting business. At their initial meeting, the friends could not decide whether to form a partnership or a limited liability company. You were approached as a company law student for advice on the type of business that would be appropriate for the friends. (a) What kind of business would you suggest to the friends? Justify your recommendation. Your reasoning should not be more than 500 words and should cover the following points: the requirement for the registration of the business in Jamaica, the advantages and disadvantages of the business type and information on the dissolution of the business. (b) Assume the friends opted to create a partnership, and has asked for your assistance in creating a Partnership deed; create a partnership deed that…Leon’s restaurant business suffers from a lack of capital. He is currently the sole owner of the business and is thinking about taking on two partners. He has approached several investors who have told him that they will only invest if they have limited liability. 1) Why would it be advisable for Leon to draft up a Partnership Deed prior to entering into the business arrangement with any new investors? 2) What would be the outcome if there is no Partnership Deed? 3)In a situation in which a Partnership Deed exists and a dispute arises, which would take precedence, the Partnership Deed or the Partnership Act? 4)Who are considered silent or sleeping partners?
- Twelve years ago, Adams, Boyd, and Chambers formed a partnership manufacturing small circuit boards. Unfortunately, foreign competition, a softening economy, and management errors have led the partners to realize that the company’s business cannot be sustained and that the partnership must be liquidated. A condensed balance sheet is as follows:(attached)Boyd is extremely concerned that after liquidation of the partnership they would still continue to be personally insolvent. This would be devastating to Boyd, and they have come to you with their concerns.Prepare a response to each of Boyd’s independent questions noting that profits and losses are allocated 40%, 20%, and 20% to Adams, Boyd, and Chambers, respectively.1. If assets with a book value of $180,000 were sold for $200,000 and the partners agreed to maintain a minimum cash balance of $5,000, would any of the available cash be distributed to Boyd?2. If all of the noncash assets were sold for net proceeds of $280,000 and all cash…Farah and David decide to form a sports memorabilia retail partnership. They have known each other since business graduate school and have always worked well together on various projects. The business is doing well but cash flow is very tight. Farah takes several calls from vendors asking for payment. He believed David had been paying the bills. When he asks about this, David admits to embezzling from the partnership. What liability does Farah face as a result of the theft? Are you for or against a partnership? Please explain.Please help me answer this question. Tom, Dani, and Harry are partners in an equipment leasing business that has not been able to generate the type of revenue expected by the partners. They share profits and losses in a ratio of 5:3:2. They have decided to liquidate the business and have sold all the assets except for one piece of heavy machinery. All partnership liabilities have been settled, and all the partners are personally insolvent. The machinery has a book value of $65,000, and the partners have capital account balances as follows: Tom, Capital $ 40,000 Dick, Capital 10,000 Harry, Capital 15,000 Each of the following is an independent case. Refer to the information given above. What amount of cash will each partner receive as a liquidating distribution if the machinery is sold for $1,100? Tom Dani Harry A) $ 1,100 $ 0 $ 0 B) $ 8,050 $ 9,170 $ 2,220 C) $ 1,500 $ 0 $ 400 D) $ 1,500 $ 0 $ 0
- A, B and C are partners in an accounting firm with each partner owning an equal share of the business. B died suddenly of a heart attack. What will most likely become of the partnership? It will immediately cease to exist. A and C will have to find new jobs It will be dissolved. A and C will lose personal property to pay business debts. B's share of the business will automatically be split between A and C A and C will be able to purchase B's interest from his estate.A, B and C are partners in an accounting firm with each partner owning an equal share of the business. B died suddenly of a heart attack. What will most likely become of the partnership? Choose one answer. It will immediately cease to exist. A and C will have to find new jobs It will be dissolved. A and C will lose personal property to pay business debts. B share of the business will automatically be split between A and C A and B will be able to purchase C's interest from his estate.Natalie’s friend Curtis Lesperance decides to meet with Natalie after hearing that her discussions about a possible business partnership with her friend Katy Peterson have failed. Natalie had decided that forming a partnership with Katy, a high school friend, would hurt their friendship. Natalie had also concluded that she and Katy were not compatible to operate a business venture together. Because Natalie has been so successful with Cookie Creations and Curtis has been just as successful with his coffee shop, they both conclude that they could benefit from each other’s business expertise. Curtis and Natalie next evaluate the different types of business organization. Because of the advantage of limited personal liability, they decide to form a corporation. Curtis has operated his coffee shop for 2 years. He buys coffee, muffins, and cookies from a local supplier. Natalie’s business consists of giving cookie-making classes and selling fine European mixers. The plan is for Natalie to use…
- Angela and Agatha are partners in Double A Partners. When they withdraw cash for personal use, how should that be recorded in the accounting records?Martin Manera is one of three partners who own and operate TaftWorld, a global import and export business. Martin is the partner in charge of recording partnership transactions in the accounts. One day while driving to work, Martin’s car broke down. Upon inspection, the mechanic discovered the engine had to be replaced at a cost of $5,000. Martin does not have enough money in his bank account and his credit cards are at their limits. He has to have this car to come to work, and he only uses his car for this purpose. He decides to take $5,000 from the partnership for the repair and record it as an expense of the partnership. What are three ethical issues in this scenario?Margie and her sister, Jan, each own half of the shares of a closely held business. Margie is concerned about what will happen to the business if Jan dies because Jean just married a man who Margie cannot stand. Jan is also concerned because, although Margie is currently single, she has children from a prior marriage who Jan feels are spendthrifts. Neither sister is ready to quit the business and retire. Neither sister is financially able to pay a gift tax or a capital gains tax. Which one of the following is the most appropriate business transfer technique for Margie and Jan to use in this situation? A) A private annuity agreement between the two sisters B) A cross-purchase buy-sell agreement between the two sisters C) An installment sale contract between the two sisters D) A preferred stock recapitalization of the business